10-Q

fSep2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number    001-37550

QUORUM HEALTH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	47-4725208
(State of other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1573 Mallory Lane Brentwood, Tennessee	37027
(Address of principal executive offices)	(Zip code)

(615) 221-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑  (Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No ☑ 

As of August 4, 2017, there were 30,297,524 shares outstanding of the registrant’s Common Stock, $0.0001 par value per share.

QUORUM HEALTH CORPORATION

Quarterly Report on Form 10-Q

Table of Contents

			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	89
	Item 4.	Controls and Procedures	89
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	90
	Item 1A.	Risk Factors	92
	Item 6.	Exhibits	92
Signatures			93
Index to Exhibits			94

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (LOSS)

(In Thousands, Except Earnings per Share and Shares)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating revenues, net of contractual allowances and discounts	$	585,215		$	598,163		$	1,173,160		$	1,212,647
Provision for bad debts		55,069			68,426			115,374			133,359
Net operating revenues		530,146			529,737			1,057,786			1,079,288
Operating costs and expenses:
Salaries and benefits		265,309			264,886			529,911			521,748
Supplies		64,112			64,136			127,934			127,797
Other operating expenses		157,613			163,185			321,037			327,648
Depreciation and amortization		20,586			31,463			42,706			62,620
Rent		12,152			12,545			24,254			25,094
Electronic health records incentives earned		(1,777	)		(4,247	)		(4,229	)		(8,455	)
Legal, professional and settlement costs		3,934			5,447			4,469			5,688
Impairment of long-lived assets and goodwill		12,900			250,400			16,200			250,400
Loss (gain) on sale of hospitals, net		(4,321	)		—			(5,191	)		—
Transaction costs related to the Spin-off		—			1,177			31			4,912
Total operating costs and expenses		530,508			788,992			1,057,122			1,317,452
Income (loss) from operations		(362	)		(259,255	)		664			(238,164	)
Interest expense, net		30,458			29,276			57,988			56,728
Income (loss) before income taxes		(30,820	)		(288,531	)		(57,324	)		(294,892	)
Provision for (benefit from) income taxes		(245	)		(44,565	)		456			(46,239	)
Net income (loss)		(30,575	)		(243,966	)		(57,780	)		(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		55			1,095			411			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	(245,061	)	$	(58,191	)	$	(250,063	)
Earnings (loss) per share attributable to Quorum Health Corporation stockholders:
Basic and diluted	$	(1.09	)	$	(8.63	)	$	(2.08	)	$	(8.80	)
Weighted-average shares outstanding:
Basic and diluted		28,145,215			28,412,720			27,977,738			28,412,389

See accompanying notes

1

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

(In Thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		120			(3,810	)		242			(3,810	)
Comprehensive income (loss)		(30,455	)		(247,776	)		(57,538	)		(252,463	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		55			1,095			411			1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(30,510	)	$	(248,871	)	$	(57,949	)	$	(253,873	)

See accompanying notes

2

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(In Thousands, Except Par Value per Share and Shares)

	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	22,405		$	25,455
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively		409,217			380,685
Inventories		54,269			58,124
Prepaid expenses		27,641			23,028
Due from third-party payors		97,172			116,235
Current assets of hospitals held for sale		5,813			1,502
Other current assets		48,329			57,942
Total current assets		664,846			662,971
Property and equipment, at cost		1,436,407			1,519,975
Less:  Accumulated depreciation and amortization		(724,929	)		(786,075	)
Total property and equipment, net		711,478			733,900
Goodwill		409,781			416,833
Intangible assets, net		77,694			84,982
Long-term assets of hospitals held for sale		14,381			6,851
Other long-term assets		109,321			88,833
Total assets	$	1,987,501		$	1,994,370
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,649		$	5,683
Accounts payable		170,862			169,684
Accrued liabilities:
Accrued salaries and benefits		94,381			98,803
Accrued interest		10,142			19,915
Due to third-party payors		38,881			42,537
Current liabilities of hospitals held for sale		1,391			492
Other current liabilities		47,163			53,268
Total current liabilities		364,469			390,382
Long-term debt		1,284,721			1,241,142
Deferred income tax liabilities, net		31,729			31,474
Other long-term liabilities		141,756			108,996
Total liabilities		1,822,675			1,771,994
Redeemable noncontrolling interests		5,614			6,807
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, none issued		—			—
Common stock, $0.0001 par value per share, 300,000,000 shares authorized; 30,297,524 shares issued and outstanding at June 30, 2017, and 29,482,050 shares issued and outstanding at December 31, 2016		3			3
Additional paid-in capital		541,774			537,911
Accumulated other comprehensive income (loss)		(2,518	)		(2,760	)
Accumulated deficit		(392,217	)		(334,026	)
Total Quorum Health Corporation stockholders' equity		147,042			201,128
Nonredeemable noncontrolling interests		12,170			14,441
Total equity		159,212			215,569
Total liabilities and equity	$	1,987,501		$	1,994,370

See accompanying notes

3

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF EQUITY

For the Six Months Ended June 30, 2017

(In Thousands, Except Shares)

				Quorum Health Corporation Stockholders' Equity
												Accumulated
	Redeemable								Additional			Other								Nonredeemable
	Noncontrolling			Common Stock					Paid-in			Comprehensive			Accumulated			Parent's		Noncontrolling			Total
	Interests			Shares			Amount		Capital			Income (loss)			Deficit			Equity		Interests			Equity
Balance at December 31, 2016	$	6,807			29,482,050		$	3	$	537,911		$	(2,760	)	$	(334,026	)	$	—	$	14,441		$	215,569
Comprehensive income (loss)		(1,127	)		—			—		—			242			(58,191	)		—		1,538			(56,411	)
Stock-based compensation expense		—			1,033,324			—		5,328			—			—			—		—			5,328
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			(217,850	)		—		(1,489	)		—			—			—		—			(1,489	)
Cash distributions to noncontrolling investors		(42	)		—			—		—			—			—			—		(3,809	)		(3,809	)
Adjustments to redemption values of redeemable noncontrolling interests investments		(24	)		—			—		24			—			—			—		—			24
Balance at June 30, 2017	$	5,614			30,297,524		$	3	$	541,774		$	(2,518	)	$	(392,217	)	$	—	$	12,170		$	159,212

See accompanying notes

4

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF EQUITY

For the Six Months Ended June 30, 2016

(In Thousands, Except Shares)

				Quorum Health Corporation Stockholders' Equity
												Accumulated
	Redeemable								Additional			Other									Nonredeemable
	Noncontrolling			Common Stock					Paid-in			Comprehensive			Accumulated			Parent's			Noncontrolling			Total
	Interests			Shares			Amount		Capital			Income (loss)			Deficit			Equity			Interests			Equity
Balance at December 31, 2015	$	8,958			—		$	—	$	—		$	—		$	—		$	3,184		$	12,759		$	15,943
Comprehensive income (loss)		(296	)		—			—		—			(3,810	)		(234,951	)		(15,112	)		1,706			(252,167	)
Transfers to Parent (prior to Spin-off)		—			—			—		—			—			—			15,112			—			15,112
Change in equity related to the Spin-off		—			28,412,054			3		518,518			—			—			(3,137	)		—			515,384
Stock-based compensation expense		—			1,078,005			—		1,897			—			—			—			—			1,897
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			(812	)		—		(28	)		—			—			—			—			(28	)
Cash distributions to noncontrolling investors		(255	)		—			—		—			—			—			—			(2,392	)		(2,392	)
Purchases of shares from noncontrolling investors		(31	)		—			—		—			—			—			19			—			19
Adjustments to redemption values of redeemable noncontrolling interests investments		117			—			—		(51	)		—			—			(66	)		—			(117	)
Noncontrolling interest in acquired entity		(133	)		—			—		—			—			—			—			—			—
Balance at June 30, 2016	$	8,360			29,489,247		$	3	$	520,336		$	(3,810	)	$	(234,951	)	$	—		$	12,073		$	293,651

See accompanying notes

5

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(In Thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Cash flows from operating activities:
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		20,586			31,463			42,706			62,620
Non-cash interest expense		700			729			1,430			729
Provision for (benefit from) deferred income taxes		(346	)		(47,451	)		255			(47,451	)
Stock-based compensation expense		2,531			1,897			5,328			1,897
Impairment of long-lived assets and goodwill		12,900			250,400			16,200			250,400
Loss (gain) on sale of hospitals, net		(4,321	)		—			(5,191	)		—
Changes in reserves for self-insurance claims, net of payments		7,042			8,901			11,254			16,891
Changes in reserves for legal, professional and settlement costs, net of payments		—			4,642			(3,651	)		4,642
Other non-cash expense (income), net		47			(33	)		5			(587	)
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Patient accounts receivable, net		(13,186	)		4,911			(30,349	)		(7,211	)
Due from and due to third-party payors, net		4,366			(6,538	)		15,407			5,355
Inventories, prepaid expenses and other current assets		8,942			5,103			(7,732	)		2,277
Accounts payable and accrued liabilities		(36,773	)		36,072			1,292			29,129
Long-term assets and liabilities, net		606			(9,334	)		1,871			(8,845	)
Net cash provided by (used in) operating activities		(27,481	)		36,796			(8,955	)		61,193
Cash flows from investing activities:
Capital expenditures for property and equipment		(15,925	)		(20,367	)		(39,142	)		(33,207	)
Capital expenditures for software		(1,663	)		(1,278	)		(3,169	)		(3,804	)
Acquisitions, net of cash acquired		(1,887	)		—			(1,887	)		—
Proceeds from the sale of hospitals		15,874			—			20,156			—
Other investing activities		—			492			—			1,402
Net cash provided by (used in) investing activities		(3,601	)		(21,153	)		(24,042	)		(35,609	)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net		(28,000	)		—			50,000			—
Borrowings of long-term debt		72			1,255,500			72			1,255,520
Repayments of long-term debt		(4,738	)		(3,188	)		(11,847	)		(4,277	)
Increase (decrease) in Due to Parent, net		—			31,669			—			25,183
Payments of debt issuance costs		(2,891	)		(28,003	)		(2,938	)		(28,003	)
Cash paid to Parent related to the Spin-off		—			(1,217,336	)		—			(1,217,336	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		(461	)		27			(1,489	)		27
Cash distributions to noncontrolling investors		(37	)		(163	)		(3,851	)		(2,647	)
Purchases of shares from noncontrolling investors		—			—			—			(12	)
Net cash provided by (used in) financing activities		(36,055	)		38,506			29,947			28,455
Net change in cash and cash equivalents		(67,137	)		54,149			(3,050	)		54,039
Cash and cash equivalents at beginning of period		89,542			996			25,455			1,106
Cash and cash equivalents at end of period	$	22,405		$	55,145		$	22,405		$	55,145
Supplemental cash flow information:
Interest payments, net	$	51,104		$	8,894		$	66,572		$	36,347
Income tax payments, net of refunds (after the Spin-off)		28			34			28			34
Non-cash purchases of property and equipment under capital lease obligations		54			3,097			54			5,120

See accompanying notes

6

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF THE BUSINESS AND SPIN-OFF

Description of the Business

The principal business of Quorum Health Corporation, a Delaware corporation, and its subsidiaries (collectively, “QHC” or the “Company”) is to provide hospital and outpatient healthcare services in its markets across the United States. As of June 30, 2017, the Company owned or leased a diversified portfolio of 34 hospitals in rural and mid-sized markets, which are located in 16 states and have a total of 3,168 licensed beds. The Company provides outpatient healthcare services through its hospitals and affiliated facilities, including urgent care centers, diagnostic and imaging centers, physician clinics and surgery centers. The Company’s wholly-owned subsidiary, Quorum Health Resources, LLC (“QHR”), provides management advisory and healthcare consulting services to non-affiliated hospitals located throughout the United States. Over 95% of the Company’s net operating revenues are attributable to its hospital operations business.

Description of the Spin-off

On April 29, 2016, Community Health Systems, Inc. (“CHS”, or “Parent” when referring to the carve-out period prior to April 29, 2016) completed the spin-off of 38 hospitals, including their affiliated facilities, and QHR to form Quorum Health Corporation through the distribution of 100% of the common stock of QHC, issued at a par value of $0.0001 per share, to CHS stockholders of record as of the close of business on April 22, 2016 (the “Record Date”) and cash proceeds to CHS of $1.2 billion (the “Spin-off”). Each CHS stockholder received a distribution of one share of QHC common stock for every four shares of CHS common stock held as of the Record Date plus cash in lieu of fractional shares. Quorum Health Corporation began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “QHC” on May 2, 2016.

In connection with the Spin-off, QHC issued $400 million in aggregate principal amount of 11.625% Senior Notes due 2023 (the “Senior Notes”) on April 22, 2016, pursuant to an indenture (the “Indenture”) by and between the Company and Regions Bank, as Trustee. The Senior Notes were issued at a discount of $6.9 million, or 1.734%. The gross offering proceeds of the Senior Notes were deposited into a segregated escrow account at the closing of the offering on April 22, 2016. On April 29, 2016, the Company entered into a credit agreement (the “Senior Credit Facility”) consisting of an $880 million senior secured term loan facility (the “Term Loan Facility”), which was issued at a discount of $17.6 million, or 98% of par value, and a $100 million senior secured revolving credit facility (the “Revolving Credit Facility”). In addition, the Company entered into a $125 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”) on April 29, 2016. The net offering proceeds of the Senior Notes were released to QHC from the escrow account on April 29, 2016. The net offering proceeds of the Senior Notes, together with the net borrowings under the Term Loan Facility, were used to pay $1.2 billion of the cash proceeds to CHS, as mentioned above, and to pay the Company’s fees and expenses related to the Spin-off. The cash proceeds paid to CHS were characterized as a one-time, tax-free cash distribution.

In connection with the Spin-off, QHC and CHS entered into a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement on April 29, 2016, which, collectively, governed or continue to govern the allocation of employees, assets and liabilities that were transferred to QHC from CHS, including but not limited to investments, working capital, property and equipment, employee benefits and deferred tax assets and liabilities. In addition, QHC and CHS entered into various transition services agreements and other ancillary agreements that govern certain relationships and activities of QHC and CHS for five years following the Spin-off. See Note 16 — Related Party Transactions for additional information on the agreements that exist between QHC and CHS after the Spin-off.

In connection with the Spin-off, CHS contributed $530.6 million of additional paid-in capital to QHC and made a $13.5 million cash contribution to QHC, pursuant to the Separation and Distribution Agreement. This contribution consisted of $20.0 million of cash contributed to fund a portion of QHC’s initial working capital, reduced by $6.5 million for the difference in estimated and actual financing transaction fees related to the Spin-off.

7

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

The following table provides a summary of the major transactions to effect the Spin-off of QHC as a newly formed, independent company (dollars in thousands):

											Additional
	Long-Term			Due to			Common Stock				Paid-in			Parent's
	Debt			Parent, Net			Shares		Amount		Capital			Equity
Balance at April 29, 2016 (prior to the Spin-off)	$	24,179		$	1,813,836			—	$	—	$	—		$	3,137
Borrowings of long-term debt, net of debt issuance discounts		1,255,464			—			—		—		—			—
Payments of debt issuance costs		(29,146	)		—			—		—		—			—
Cash proceeds paid to Parent		—			(1,217,336	)		—		—		—			—
Transfer of liabilities from Parent		—			(22,292	)		—		—		—			—
Net deferred income tax liability resulting from the Spin-off		—			(46,783	)		—		—		—			—
Non-cash capital contribution from Parent		—			(527,425	)		—		—		530,562			(3,137	)
Distribution of common stock		—			—			27,719,645		3		(3	)		—
Distribution of restricted stock awards		—			—			692,409		—		—			—
Balance at April 29, 2016 (after the Spin-off)	$	1,250,497		$	—			28,412,054	$	3	$	530,559		$	—

The following table provides a summary of the liabilities transferred to QHC from CHS in connection with the Spin-off (in thousands):

	April 29, 2016
Accounts payable	$	13,607
Benefit plan liabilities		5,964
Other liabilities		2,721
Total liabilities transferred from Parent	$	22,292

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated and combined financial statements and accompanying notes of the Company presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). In the opinion of the Company’s management, the condensed consolidated and combined financial information presented herein includes all adjustments necessary to present fairly the results of operations, financial position and cash flows of the Company for the interim periods presented. Results of operations for interim periods should not be considered indicative of the results of operations expected for the full year ending December 31, 2017. Certain information and disclosures have been condensed or omitted as presented herein and as permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim period presentation. The Company’s management believes the financial statements and disclosures presented herein are adequate in order to make the information presented not misleading. The condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and accompanying notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2017 (the “2016 Form 10-K”).

Prior to its separation from CHS on April 29, 2016, QHC did not operate as a separate company and stand-alone financial statements were not historically prepared; however, QHC was comprised of certain stand-alone legal entities for which discrete financial information was available under CHS’ ownership. The accompanying condensed consolidated and combined financial statements include amounts and disclosures for QHC that have been derived from the consolidated financial statements and accounting records of CHS for the periods prior to the Spin-off in combination with the amounts and disclosures related to the stand-alone financial statements and accounting records of QHC after the Spin-off. The accompanying condensed consolidated and combined financial statements may not necessarily be indicative of the results of operations, financial position and cash flows of QHC in the future or those that would have occurred had the Company operated on a stand-alone basis during the entirety of the periods

8

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

presented herein. See Note 16 — Related Party Transactions for additional information on the carve-out of financial information from CHS.

The Company’s financial statements have been prepared under the assumption that it will continue as a going concern. The Company has limited stand-alone operating history and has experienced net losses in each of the quarters subsequent to the Spin-off from CHS. On December 31, 2016, the Company adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements — Going Concern, which requires management to evaluate if there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern. As a result of adopting ASU No. 2014-15, management was required to evaluate the Company’s ability to comply with the Secured Net Leverage Ratio under its Senior Credit Facility for one year following the issuance of the financial statements for the six month period ended June 30, 2017. Although the Company was in compliance with its financial covenants as of June 30, 2017, the new standard requires management to base its evaluation about the ability to continue to comply with those covenants on results and events considered “probable” of occurring considering historical results, implemented plans, and executed agreements as of the date the financial statements are issued. In light of (i) the Company’s historical net operating results; (ii) delays in the approval by Centers for Medicare & Medicaid Services (“CMS”) of the California Hospital Quality Assurance Fee (“HQAF”) program for the 2017 to 2019 program period, which impacts the Company due to the inability to recognize any earned revenues until CMS approval of the program has been issued; and (iii) the amount of net operating losses from hospitals the Company intends to divest, management amended certain provisions of its Senior Credit Facility.

On April 11, 2017, the Company executed an agreement with its Senior Credit Facility lenders to amend certain provisions of its Senior Credit Facility (the “CS Amendment”) to, among other things, raise the maximum Secured Net Leverage Ratio (as defined in the credit agreement (the “CS Agreement”), among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent) to 4.75x from 4.25x for the period July 1, 2017 to December 31, 2018 (which was previously 4.25x for the period July 1, 2017 to June 30, 2018), at which point it drops to 4.00x for the remainder of the agreement. The CS Amendment also provides for additional Consolidated EBITDA add-backs under the covenant calculation for certain items. For additional information related to the CS Amendment, see Note 7 — Long-term Debt. Management has concluded that the CS Amendment alleviates any substantial doubt about its ability to continue as a going concern for the one year period following the issuance of its financial statements for the six month period ended June 30, 2017. The Company is actively engaged in initiatives to divest underperforming hospitals and outpatient facilities, for which proceeds will be used to pay down the Company’s term loan under its credit facility.

For all defined terms related to the Company’s Senior Credit Facility, see Note 7 – Long-term Debt.

Principles of Consolidation and Combination

The consolidated and combined financial statements include the accounts of the Company and its subsidiaries in which it holds either a direct or indirect ownership of a majority voting interest. Investments in less-than-wholly-owned consolidated subsidiaries of QHC are presented separately in the equity component of the consolidated and combined balance sheets to distinguish between the interests of QHC and the interests of the noncontrolling investors. Revenues and expenses from these subsidiaries are included in the respective individual line items of the Company’s consolidated and combined statements of income, and net income is presented both in total and separately to distinguish the amounts attributable to the Company and the amounts attributable to the interests of the noncontrolling investors. Noncontrolling interests that are redeemable, or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company, are presented in mezzanine equity in the consolidated and combined balance sheets.

Intercompany transactions and accounts of the Company are eliminated in consolidation. Additionally, all significant transactions with CHS that occurred prior to the Spin-off were included in the consolidated and combined balance sheets within Due to Parent, net. This liability to CHS was settled in the Spin-off.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

In the third quarter of 2016, the Company reclassified and separately presented certain items in its consolidated and combined statements of cash flows. Specifically, changes in self-insurance reserves related to employee health, professional and general liability and workers’ compensation liability were reclassified to changes in reserves for self-insurance claims, net of payments, and changes in reserves for legal, professional and settlement costs were reclassified to changes in reserves for legal, professional and settlement costs, net of payments. The Company believes the current presentation more accurately distinguishes the changes in these liabilities

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from changes in operating assets and liabilities considered to be part of its normal business operations. Both items are included in cash flows from operating activities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated and combined financial statements and accompanying notes. Actual results could differ from those estimates under different assumptions or conditions.

Revenues and Accounts Receivable

Revenue Recognition

The Company recognizes revenues from patient services at its hospitals and affiliated outpatient facilities in the period services are performed and reports these revenues at the net realizable amount expected to be collected from patients and third-party payors. Billings and collections are outsourced to CHS under the transition services agreements that were entered into in connection with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements.

The amounts collected for patient services are generally less than established billing rates, or standard billing charges, due to contractual agreements with third-party payors, governmental programs that require reduced billing rates, discounts offered as incentives for payment, and a portion related to bad debts. The Company recognizes revenues related to its QHR business when management advisory and consulting services are provided and reports these revenues at the net realizable amount expected to be collected from the non-affiliated hospital clients.

The following table provides a summary of the components of net operating revenues, before the provision for bad debts (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating revenues	$	3,023,793		$	3,042,786		$	6,092,116		$	6,123,439
Less: Contractual allowances		(2,336,287	)		(2,335,554	)		(4,707,578	)		(4,696,589	)
Less: Discounts		(102,291	)		(109,069	)		(211,378	)		(214,203	)
Total net operating revenues, before the provision for bad debts	$	585,215		$	598,163		$	1,173,160		$	1,212,647

Payor Sources

The primary sources of payment for patient healthcare services are third-party payors, including federal and state agencies administering the Medicare and Medicaid programs, other governmental agencies, managed care health plans, commercial insurance companies, workers’ compensation carriers and employers. Self-pay revenues are the portion of patient service revenues derived from patients who do not have health insurance coverage and the patient responsibility portion of services that are not covered by health insurance plans. Non-patient revenues primarily include revenues from QHR’s hospital management advisory and consulting services business, rental income and hospital cafeteria sales.

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The following tables provide a summary of net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Three Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	160,167		27.4	%	$	167,549		28.0	%
Medicaid		107,341		18.3	%		113,283		18.9	%
Managed care and commercial plans		238,448		40.7	%		230,595		38.6	%
Self-pay		55,310		9.5	%		59,171		9.9	%
Non-patient		23,949		4.1	%		27,565		4.6	%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	598,163		100.0	%
	Six Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	335,460		28.6	%	$	343,083		28.3	%
Medicaid		204,010		17.4	%		216,351		17.8	%
Managed care and commercial plans		470,005		40.0	%		474,879		39.2	%
Self-pay		114,390		9.8	%		123,925		10.2	%
Non-patient		49,295		4.2	%		54,409		4.5	%
Total net operating revenues, before the provision for bad debts	$	1,173,160		100.0	%	$	1,212,647		100.0	%

Contractual Allowances and Discounts

The net realizable amount of patient service revenues due from third-party payors is subject to complexities and interpretations of payor-specific contractual agreements and governmental regulations that are frequently changing. The Medicare and Medicaid programs, which represent a large portion of the Company’s operating revenues, are highly complex programs to administer and are subject to interpretation of federal and state-specific reimbursement rates, new legislation and final cost report settlements. Contractual allowances, or differences in standard billing rates and the payments derived from contractual terms with governmental and non-governmental third–party payors, are recorded based on management’s best estimates in the period in which services are performed and a payment methodology is established with the patient. Recorded estimates for past contractual allowances are subject to change, in large part, due to ongoing contract negotiations and regulation changes, which are typical in the U.S. healthcare industry. Revisions to estimates are recorded as contractual allowance adjustments in the periods in which they become known and may be subject to further revisions. Self-pay and other payor discounts are incentives offered to uninsured or underinsured payors to reduce their costs of healthcare services with the purpose of maximizing the Company’s collection efforts.

Third-Party Program Reimbursements

Cost report settlements under reimbursement programs with Medicare, Medicaid and other managed care plans are estimated and recorded in the period the related services are performed and are adjusted in future periods, as needed, until the final cost report settlements are determined.Previous program reimbursements and final cost report settlements are included in due from and due to third-party payors in the consolidated and combined balance sheets. Previously, these amounts were a component of other current assets and other current liabilities in the consolidated and combined balance sheets. Contractual allowance adjustments related to previous program reimbursements and final cost report settlements favorably (unfavorably) impacted net operating revenues $1.4 million and $(2.5) million during the three months ended June 30, 2017 and 2016, respectively, and less than $(0.1) million and $(4.4) million during the six months ended June 30, 2017 and 2016, respectively.

Currently, several states utilize supplemental payment programs, including disproportionate share programs, for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from CMS and are funded with a combination of federal and state resources, including, in certain instances, taxes, fees or other program expenses (collectively, “provider taxes”) levied on the providers. Similar programs are also

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currently being considered by other states. These amounts are included in due from and due to third-party payors in the consolidated and combined balance sheets.

The following table provides a summary of the components of amounts due from and due to third-party payors (in thousands):

	June 30,		December 31,
	2017		2016
Amounts due from third-party payors:
Previous program reimbursements and final cost report settlements	$	22,182	$	23,876
State supplemental payment programs		74,990		92,359
Total amounts due from third-party payors	$	97,172	$	116,235
Amounts due to third-party payors:
Previous program reimbursements and final cost report settlements	$	31,535	$	33,366
State supplemental payment programs		7,346		9,171
Total amounts due to third-party payors	$	38,881	$	42,537

After a state supplemental payment program is approved and fully authorized by the appropriate state legislative or governmental agency, the Company recognizes revenue and related expenses based on the terms of the program in the period in which amounts are estimable and revenue collection is reasonably assured. The revenues earned by the Company under these programs are included in net operating revenues and the expenses associated with these programs are included in other operating expenses in the consolidated and combined statements of income.

The following table provides a summary of the portion of Medicaid reimbursements attributable to state supplemental payment programs (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Medicaid revenues	$	46,381	$	55,105	$	91,678	$	107,320
Provider taxes and other expenses		17,230		18,604		34,123		38,030
Reimbursements attributable to state supplemental payment programs, net of expenses	$	29,151	$	36,501	$	57,555	$	69,290

The California Department of Health Care Services implemented the HQAF program, imposing a fee on certain general and acute care California hospitals. Revenues generated from these fees provide funding for the non-federal supplemental payments to California hospitals that serve California’s Medi-Cal and uninsured patients. Under the most recent phase of the program, covering the period January 2014 through December 2016, the Company recognized $11.3 million of Medicaid revenues and $2.7 million of provider taxes for the three months ended June 30, 2016 and $22.3 million of Medicaid revenues and $5.4 million of provider taxes for the six months ended June 30, 2016. The current program expired on December 31, 2016 and CMS has not approved a new program. Consistent with the first four phases of the HQAF program, the Company is not recognizing revenues under the pending program in 2017 or thereafter until CMS completes the approval process.

Charity Care

In the ordinary course of business, the Company provides services to patients who are financially unable to pay for hospital care. The related charges for those patients who are financially unable to pay that otherwise do not qualify for reimbursement from a governmental program are classified as charity care. The Company determines amounts that qualify for charity care primarily based on the patient’s household income relative to the poverty level guidelines established by the federal government. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges are recorded in operating revenues at the standard billing rates and fully offset in contractual allowances in the same period. The gross amounts of charity care revenues were $7.5 million and $7.0 million for the three months ended June 30, 2017 and 2016, respectively, and $20.0 million and $14.8 million for the six months ended June 30, 2017 and 2016, respectively.

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Accounts Receivable and Allowance for Doubtful Accounts

Substantially all of the Company’s receivables are related to providing healthcare services to patients at its hospitals and affiliated outpatient facilities.

The following table provides a summary of the components of patient accounts receivable, before contractual allowances, discounts and allowance for doubtful accounts (dollars in thousands):

	June 30, 2017					December 31, 2016
	$ Amount		% of Total			$ Amount		% of Total
Third-parties	$	2,119,455		77.3	%	$	1,930,103		74.6	%
Self-pay		621,630		22.7	%		656,373		25.4	%
Total patient accounts receivable, gross	$	2,741,085		100.0	%	$	2,586,476		100.0	%

Accounts receivable are reduced by an allowance for amounts that could become uncollectible in the future. The Company estimates the allowance for doubtful accounts by reserving a percentage of all self-pay accounts receivable without regard to aging category. The allowance percentage is based on a model that considers the historical write-off activity and is adjusted for expected recoveries and any anticipated changes in trends. The Company’s ability to estimate the allowance for doubtful accounts is not significantly impacted by the aging of accounts receivable, as management believes that substantially all of the risk exists at the point in time such accounts are identified as self-pay. For insured receivables, which are the non-self-pay receivables, the Company estimates the allowance for doubtful accounts based on a model that considers the uncontractualized portion of all accounts aging over 365 days from the date of patient discharge, reduced by an estimate for recoveries.

The following table provides a summary of the changes in the allowance for doubtful accounts (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	360,796
Provision for bad debts		115,374
Amounts written off, net of recoveries		(135,973	)
Balance at end of period	$	340,197

Collections are impacted by the economic ability of patients to pay, the effectiveness of CHS’ billing and collection efforts, including their current policies on collections, and the ability of the Company to further attempt collection efforts. Billings and collections are outsourced to CHS under the transition services agreements that were established with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements. Significant changes in payor mix, centralized business office operations, including the CHS shared service centers’ efforts in collecting the Company’s accounts receivable, economic conditions or trends in federal and state governmental healthcare coverage, among others, could affect the Company’s estimates of accounts receivable collectability. The Company also continually reviews its overall allowance adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues after the provision for bad debts, as well as by analyzing current period net operating revenues and admissions by payor classification, aged accounts receivable by payor, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables, and the impact of recent acquisitions and divestitures.

Concentration of Credit Risk

The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s hospitals and affiliated facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s markets and non-governmental third-party payors, Medicare represents a significant concentration of credit risk from payors. Accounts receivable, net of contractual allowances, from Medicare were $73.4 million and $72.6 million, or 9.8% and 9.8% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. Additionally, due to fiscal problems in the state of Illinois, the Company believes Illinois Medicaid represents a concentration of credit risk. The Company’s accounts receivable, net of contractual allowances, from Illinois Medicaid were $47.6 million and $34.8 million, or 6.4% and 4.7% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. The Company’s state supplemental program receivables from Illinois Medicaid were $18.1 million and $16.6 million, or 18.6% and 14.3% of total due from third-party payors, as of June 30, 2017 and December 31, 2016, respectively.

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The Company’s revenues are particularly sensitive to regulatory and economic changes in certain states where the Company generates significant revenues. Accordingly, any changes in the current demographic, economic, competitive or regulatory conditions in certain states in which revenues are significant could have an adverse effect on the Company’s results of operations, financial condition or cash flows. Changes to Medicaid and other government-managed payor programs in these states, including reductions in reimbursement rates or delays in reimbursement payments under state supplemental payment or other programs, could also have a similar adverse effect.

The following table provides a summary of the states in which the Company generated more than 5% of total net patient revenues, before the provision for bad debts, as determined in each period (dollars in thousands):

	Number of	Six Months Ended June 30,
	Hospitals at	2017					2016
	June 30, 2017	$  Amount		% of Total			$  Amount		% of Total
Illinois	9	$	414,132		36.8	%	$	399,049		34.5	%
Oregon	1		106,514		9.5	%		104,810		9.0	%
Georgia	2		88,276		7.9	%		107,469		9.3	%
California	2		81,238		7.2	%		101,562		8.8	%
Kentucky	3		61,443		5.5	%		59,375		5.1	%

Other Operating Expenses

The following table provides a summary of the major components of other operating expenses (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Purchased services	$	43,843	$	44,636	$	89,439	$	90,120
Taxes and insurance		33,610		34,261		67,853		69,567
Medical specialist fees		28,888		25,182		57,351		49,532
Transition services agreements and allocations from Parent		15,986		17,841		32,268		34,098
Repairs and maintenance		9,759		10,730		21,202		21,966
Utilities		6,727		7,001		13,392		14,156
Management fees from Parent		—		2,966		—		11,792
Other miscellaneous operating expenses		18,800		20,568		39,532		36,417
Total other operating expenses	$	157,613	$	163,185	$	321,037	$	327,648

Following the Spin-off, the Company began recording costs associated with the transition services agreements and other ancillary agreements with CHS in accordance with the terms of these agreements. These costs, which primarily include the costs of providing information technology, patient billing and collections and payroll services, are included in “Transition services agreements and allocations from Parent” in the table above. Amounts allocated to the Company by CHS for periods prior to the Spin-off are also included in “Transition services agreements and allocations from Parent” in the table above.

Prior to the Spin-off, QHC recorded a monthly corporate management fee from CHS that represented a portion of CHS’ corporate office costs, and this fee was included in other operating expenses. Following the Spin-off, the costs for corporate office functions are primarily included in salaries and benefits expenses in the consolidated and combined statements of income.

See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

General and Administrative Costs

Substantially all of the Company’s operating costs and expenses are “cost of revenues” items. Operating expenses that could be classified as general and administrative by the Company are costs related to corporate office functions, including, but not limited to tax, treasury, audit, risk management, legal, investor relations and human resources. These costs are primarily salaries and benefits expenses associated with these corporate office functions. General and administrative costs of the Company were $14.5 million and $11.7 million during the three months ended June 30, 2017 and 2016, respectively, and $30.1 million and $23.7 million during the six

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months ended June 30, 2017 and 2016, respectively. Prior to the Spin-off, the majority of these costs were allocations from CHS. See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

Electronic Health Records Incentives Earned

Pursuant to the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the Company is eligible to receive incentive payments under the Medicare and Medicaid programs for its eligible hospitals and physician clinics that demonstrate meaningful use of certified Electronic Health Records (“EHR”) technology. Each of the Company’s eligible hospitals and physician clinics has completed the initial adoption phase of EHR implementation and is currently in the process of implementing the remaining two phases.EHR incentive payments are subject to audit and potential recoupment if it is determined that the applicable meaningful use standards were not met. EHR incentive payments are also subject to retrospective adjustment because the cost report data upon which the incentive payments are based are further subject to audit.

The Company utilizes a gain contingency model to recognize EHR incentive payments. When the recognition criteria have been fully met, the Company recognizes the income from EHR incentives payments as a part of operating costs and expenses in the consolidated and combined statements of income. Medicaid EHR incentive payments are calculated based on prior period Medicare cost report information available at the time when eligible hospitals demonstrate meaningful use of certified EHR technology. Medicare EHR incentive payments are calculated when eligible hospitals demonstrate meaningful use of certified EHR technology and the information for the applicable full Medicare cost report year used to determine the final incentive payment is available. In some instances, the Company may receive estimated Medicare EHR incentive payments prior to when the Medicare cost report information used to determine the final incentive payment is available. In these instances, recognition of the income from EHR incentive payments is deferred until all recognition criteria are met. The Company recognizes receivables for EHR incentive payments that have been earned, but are uncollected at period end, as other current assets in the consolidated and combined balance sheets. The receivables are adjusted for any known audit or retrospective adjustments related to prior periods. Deferred revenue from EHR incentive payments is recorded in other current liabilities in the consolidated and combined balance sheets.

The Company incurs both capital expenditures and operating expenses in connection with the implementation of EHR technology initiatives. The amounts and timing of these expenditures does not directly correlate with the timing of the Company’s receipt or recognition of EHR incentive payments as earned. As the Company completes its full implementation of certified EHR technology in accordance with all three phases of the program, its EHR incentive payments will decline and ultimately end.

The following table provides a summary of activity related to EHR incentives (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Electronic health records incentives receivable at beginning of period	$	5,578		$	5,885		$	4,189		$	11,227
Electronic health records incentives earned		1,777			608			4,229			4,816
Cash incentive payments received		(4,624	)		(5,124	)		(5,466	)		(12,749	)
Adjustments to receivable based on final cost report settlement or audit		(475	)		604			(696	)		(1,321	)
Electronic health records incentives receivable at end of period	$	2,256		$	1,973		$	2,256		$	1,973
Deferred revenue related to electronic health records incentives at beginning of period	$	—		$	(4,693	)	$	—		$	—
Cash received and deferred during period		(256	)		—			(256	)		(4,693	)
Recognition of deferred incentives as earned		—			3,639			—			3,639
Deferred revenue related to electronic health records incentives at end of period	$	(256	)	$	(1,054	)	$	(256	)	$	(1,054	)
Total electronic health records incentives earned during period	$	1,777		$	4,247		$	4,229		$	8,455
Total cash incentive payments received during period		4,880			5,124			5,722			17,442

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Legal, Professional and Settlement Costs

Legal, professional and settlement costs in the consolidated and combined statements of income primarily include legal costs and related settlements, if any, related to regulatory claims, government investigations into reimbursement payments and claims associated with QHR’s hospital management contracts. Professional costs include legal costs for investigations, data gathering and analysis associated with investigation projects approved by the Company’s Board of Directors (the “Board”).

Loss (Gain) on Sale of Hospitals, Net

Loss (gain) on sale of hospitals, net is the loss (gain) related to the Company’s divestiture of hospitals and their related outpatient facilities. It is calculated as the difference between the cash received from the sale and the carrying value of the associated net assets at the date of sale, less certain incremental direct selling costs.

Transaction Costs Related to the Spin-off

Transaction costs related to the Spin-off consists of QHC’s portion of the costs to effect the Spin-off and the costs associated with forming a new company. These costs include audit, management advisory and consulting costs, investment advisory costs, legal expenses and other miscellaneous costs.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income. To the extent the Company believes that recovery is not likely, a valuation allowance is established. To the extent the Company establishes a valuation allowance or increases this allowance, the related expense is included in the provision for income taxes in the consolidated and combined statements of income. The Company classifies interest and penalties, if any, related to its tax positions as a component of income tax expense. See Note 11 — Income Taxes for information on the separate return method of accounting for income taxes that was used by the Company during the carve-out period.

Cash and Cash Equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments with a maturity of three months or less from the date acquired that are subject to an insignificant risk of change in value.

Inventories

Inventories, primarily consisting of medical supplies and drugs, are stated at the lower of cost or market on a first-in, first-out basis.

Other Current Assets

Other current assets consists of the current portion of the insurance receivables from CHS related to professional and general liability and workers’ compensation liability insurance reserves that were indemnified by CHS in connection with the Spin-off, non-patient accounts receivable primarily related to QHR, receivables related to electronic health records incentives and other miscellaneous current assets.

Property and Equipment

Purchases of property and equipment are recorded at cost. Property and equipment acquired in a business combination are recorded at estimated fair value. Routine maintenance and repairs are expensed as incurred. Expenditures that increase capacities or extend useful lives are capitalized. The Company capitalizes interest related to financing of major capital additions with the respective asset. Depreciation is recognized using the straight-line method over the estimated useful life of an asset. The Company depreciates land improvements over 3 to 20 years, buildings and improvements over 5 to 40 years, and equipment and fixtures over 3 to 18 years. The Company also leases certain facilities and equipment under capital lease obligations. These assets are amortized on a straight-line

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basis over the lesser of the lease term or the remaining useful life of the asset. Property and equipment assets that are held for sale are not depreciated.

Goodwill

The Company’s hospital operations and QHR’s hospital management advisory and consulting services operations meet the criteria to be classified as reporting units for goodwill. Goodwill was initially determined for QHC’s hospital operations reporting unit based on a relative fair value approach as of September 30, 2013 (CHS’ goodwill impairment testing date). Additional goodwill was allocated on a similar basis for four hospitals acquired by CHS in 2014 and included in the group of hospitals spun-off to QHC. For the QHR reporting unit, goodwill was allocated based on the amount recorded by CHS at the time of its acquisition in 2007. All subsequent goodwill generated from hospital, physician practice or other ancillary business acquisitions is recorded at fair value at the time of acquisition.

Intangible Assets

The Company’s intangible assets primarily consist of purchase and development costs of software for internal use and contract-based intangible assets, including physician guarantee contracts, medical licenses, hospital management contracts, non-compete agreements and certificates of need. There are no expected residual values related to the Company’s intangible assets. Capitalized software costs are generally amortized over three years, except for software costs for significant system conversions, which are amortized over 8 to 10 years. Costs incurred to renew certain contract-based intangibles, such as hospital management contracts and certificates of need, would be recognized as intangible assets and amortized over the respective renewed contract periods. Capitalized software costs that are in the development stage are not amortized until the related projects are complete. Assets for physician guarantee contracts, hospital management contracts, non-compete agreements and certificates of need are amortized over the life of the individual contracts. Intangible assets held for sale are not amortized.

Impairment of Long-Lived Assets and Goodwill

Whenever an event occurs or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, the Company projects the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the carrying values are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimated fair value based on valuation techniques available in the circumstances.

Goodwill arising from business combinations is not amortized. Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. The fair value of the related reporting units is estimated using both a discounted cash flow model as well as a multiple model based on earnings before interest, taxes, depreciation and amortization. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s best estimate of a market participant’s weighted-average cost of capital. Both models are based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions of the Company.

See Note 3 — Impairment of Long-Lived Assets and Goodwill for additional information related to impairment charges recorded in the condensed consolidated and combined statements of income for the six months ended June 30, 2017 and the year ended December 31, 2016.

Other Long-Term Assets

Other long-term assets consists of the long-term portion of the receivables from CHS related to professional and general liability and workers’ compensation liability insurance reserves that were indemnified by CHS in connection with the Spin-off, as well as deferred compensation plan assets, deposits, investments in unconsolidated subsidiaries and other miscellaneous long-term assets.

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Other Current Liabilities

Other current liabilities consists of the current portion of professional and general liability insurance reserves, including the portion indemnified by CHS in connection with the Spin-off, as well as property tax accruals, legal accruals, deferred revenue related to electronic health records incentives, physician guarantees and other miscellaneous current liabilities.

Professional and General Liability and Workers’ Compensation Liability Insurance Reserves

As part of the business of owning and operating hospitals, the Company is subject to legal actions alleging liability on its part. To mitigate a portion of this risk, the Company maintains insurance exceeding a self-insured retention level for these types of claims. The Company’s self-insurance reserves reflect the current estimate of all outstanding losses, including incurred but not reported losses, based on actuarial calculations as of period end. The loss estimates included in the actuarial calculations may change in the future based on updated facts and circumstances. The Company’s insurance expense includes the actuarially determined estimate of losses for the current year, including claims incurred but not reported, the change in the estimate of losses for prior years based upon actual claims development experience as compared to prior actuarial projections, the insurance premiums for losses in excess of the Company’s self-insured retention levels, the administrative costs of the insurance programs, and interest expense related to the discounted portion of the liability. The Company’s reserves for professional and general liability and workers’ compensation claims are based on semi-annual actuarial calculations, which are discounted to present value and consider historical claims data, demographic factors, severity factors and other actuarial assumptions. The reserves for self-insured claims are discounted based on the Company’s risk-free interest rate that corresponds to the period when the self-insured claims are incurred and projected to be paid.

See Note 17 — Commitments and Contingencies for information related to the portion of the Company’s insurance reserves for workers’ compensation liability and professional and general liability that are indemnified by CHS and the related accounting treatment and presentation in the consolidated and combined financial statements.

Self-Insured Employee Health Benefits

The Company is self-insured for substantially all of the medical benefits of its employees. The Company maintains a liability for its current estimate of incurred but not reported employee health claims based on historical claims data provided by third-party administrators. The undiscounted reserve for self-insured employee health benefits was $9.4 million and $11.0 million as of June 30, 2017 and December 31, 2016, respectively and is included in accrued salaries and benefits in the consolidated and combined balance sheets. Expense each period is based on the actual claims received during the period plus any adjustment to the liability.

Prior to the Spin-off, QHC was allocated employee health expense as part of the monthly corporate overhead charges from CHS. The allocation was determined based on claims made by QHC employees during the period plus an estimate for the change in liability related to QHC employee health claims incurred but not reported. The liability was included in Due to Parent, net in the consolidated and combined balance sheets, as the related employee health insurance policy was owned by CHS. Employee health expense is included in salaries and benefits expenses in the consolidated and combined statements of income for all periods. See Note 16 — Related Party Transactions for additional information on corporate overhead costs from CHS prior to the Spin-off.

Redeemable and Non-RedeemableNoncontrolling Interests

The Company’s consolidated and combined financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that it controls. Certain of the Company’s consolidated subsidiaries have noncontrolling physician ownership interests with redemption features that require the Company to deliver cash upon the occurrence of certain events outside its control, such as the retirement, death, or disability of a physician-owner. The carrying amount of redeemable noncontrolling interests is recorded in the consolidated and combined balance sheets at the greater of: (1) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of cumulative net income (loss), net of cumulative amounts distributed, if any, or (2) the redemption value.

Assets and Liabilities of Hospitals Held for Sale

The Company reports separately from other assets on the consolidated and combined balance sheet those assets that meet the criteria for classification as held for sale. Generally, assets that meet the criteria include those for which the carrying amount will be settled principally through a sale transaction rather than through continuing use. The asset must be available for immediate sale in its present condition, subject to usual or customary terms, and the sale must be probable to occur in the next 12 months. Similarly, the liabilities of a disposal group are classified as held for sale upon meeting these criteria. Immediately following classification as held for sale, the Company remeasures these assets and liabilities and adjusts the value to the lesser of the carrying amount or fair value

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less costs to sell. The assets and liabilities classified as held for sale are no longer depreciated or amortized into expense. The carrying value of assets classified as held for sale are reported net of impairment charges in the consolidated and combined balance sheets.

Stock-Based Compensation

In connection with the Spin-off, the Company issued QHC restricted stock awards to all CHS restricted stock award holders as of the Record Date. Each holder of CHS restricted stock awards received one QHC restricted stock award for every four CHS restricted stock awards held. In addition, QHC employees that held CHS restricted stock awards were allowed to continue to hold the CHS awards under the same terms and conditions that existed prior to the Spin-off, excluding certain shares granted on March 1, 2016 that were canceled in connection with the Spin-off. The unrecognized compensation expense related to the vesting of the CHS restricted stock awards held by QHC employees was transferred to QHC with the Spin-off. As a result, the Company is responsible for recording stock-based compensation expense attributable to the unvested portion of CHS restricted stock awards held by QHC employees and the unvested portion of all QHC restricted stock awards held by its employees, consisting of both QHC awards issued on the Record Date and additional awards granted under the Quorum Health Corporation 2016 Stock Award Plan (the “2016 Stock Award Plan”) following the Spin-off.

Following the Spin-off, the Company accounts for stock-based compensation in accordance with Accounting Standards Codification Topic 718, “Compensation — Stock Compensation.” Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service periods. Determining the fair value of stock-based awards at the grant date requires the exercise of judgment, including the number of stock-based awards that are expected to be forfeited. If actual forfeitures differ from the Company’s estimates, stock-based compensation expense and the Company’s results of operations would be impacted

See Note 14 — Stock-Based Compensation for additional information related to stock-based compensation.

Benefit Plans

Following the Spin-off, the Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, for which certain of the Company’s subsidiaries are the plan sponsors. The rights and obligations of these plans were transferred from CHS to the Company, pursuant to the Separation and Distribution Agreement. Prior to the Spin-off, QHC was allocated a portion of CHS’ benefit costs under its defined contribution plans. The allocation was based on specific identification for plans associated exclusively with QHC hospitals and on QHC’s proportional share of employees covered under all other applicable plans. The expense was recorded as salaries and benefits in the consolidated and combined statements of income, and the cumulative liability for these benefit costs, which was transferred to the Company in the Spin-off, was recorded in Due to Parent, net in the consolidated and combined balance sheets.

QHC recognizes the unfunded liability of its defined benefit plan in other long-term liabilities in the consolidated and combined balance sheets. Unrecognized gains (losses) and prior service credits (costs) are recorded as changes in other comprehensive income (loss). The measurement date of the plan’s assets and liabilities coincides with the Company’s year end. The Company’s pension benefit obligation is measured using actuarial calculations that incorporate discount rates, rate of compensation increases and expected long-term returns on plan assets. The calculations additionally consider expectations related to the retirement age and mortality of plan participants. The Company records pension benefit costs related to all of its plans as salaries and benefits expenses in the consolidated and combined statements of income.

Segment Reporting

The principal business of the Company is to provide healthcare services at its hospitals and outpatient facilities. The Company’s only other line of business is the hospital management advisory and consulting services it provides through QHR. The Company has determined that its hospital operations business meets the criteria for separate segment reporting. The financial information for QHR’s business does not meet the quantitative thresholds for separate segment reporting, and therefore has been combined with the Company’s corporate functions into the all other reportable segment. See Note 13 — Segments.

New Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Accounting for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. This ASU instead permits an entity to recognize goodwill impairment loss as the excess of a reporting unit’s carrying value over the estimated fair value of the reporting unit, to the

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extent this amount does not exceed the carrying amount of goodwill. The new guidance continues to allow an entity to perform a qualitative assessment over goodwill impairment indicators in lieu of a quantitative assessment in certain situations. The ASU is effective for the Company’s annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated and combined results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation, which was issued to simplify some of the accounting guidance for share-based compensation. Among the areas impacted by the amendments in this ASU are the accounting for income taxes related to share-based payments, accounting for forfeitures, classification of awards as equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this ASU on January 1, 2017. The adoption of this ASU had no material impact on the Company’s consolidated and combined results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the accounting for leases, requiring lessees to recognize most leases on their balance sheet with a right-of-use asset and a lease liability. Leases will be classified as either finance or operating leases, which will impact the expense recognition of such leases over the lease term. The ASU also modifies the lease classification criteria for lessors and eliminates some of the real estate leasing guidance previously applied for certain leasing transactions. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt this ASU on January 1, 2019. The Company utilizes a number of leases to support its operations. As such, the adoption of this ASU is expected to have a significant impact on the Company’s consolidated and combined financial position. The Company is currently evaluating the quantitative and qualitative impact the adoption of this ASU will have on its operations, policies and procedures. The Company is additionally evaluating any modifications to its leasing strategy in response to the requirements of this standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides for a single comprehensive principles-based model for the recognition of revenue across all industries using a five-step model to recognize revenue from customer contracts. The new standard significantly expands disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows as well as certain additional quantitative and qualitative disclosures. The standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016, and permits the use of either a full or modified retrospective approach upon adoption. In preparation for adoption of the ASU, the Company has established an implementation team that is evaluating the current impact the new standard will have on its revenue recognition policies, procedures, financial position, results of operations, cash flows, financial disclosures and control framework. Specifically, the Company is quantifying the impact on its results of operations, financial position and cash flows in order to determine which method, either full or modified retrospective, to use upon adoption. The Company is using a program management approach for the various revenue streams to accomplish the revenue, financial reporting and organizational impact analysis according to project milestones to ensure a systematic and timely process that will allow consideration of impact findings in the selection and implementation of a transition method. The Company cannot reasonably estimate at this time the quantitative impact that the adoption of this accounting standard will have on its consolidated financial statements. The Company notes that industry guidance continues to develop and that further guidance regarding third-party reimbursements and other reimbursement programs unique to the healthcare industry may be issued in later 2017, which may impact our evaluation. In addition to new and expanded disclosures, the Company anticipates that the most significant impact will be to the presentation of the income statement, as the provision for doubtful accounts will be recorded as a direct reduction to revenues and will not be presented as a separate line item.

NOTE 3 – IMPAIRMENT OF LONG-LIVED ASSETS AND GOODWILL

2017 Impairments

During the three months ended June 30, 2017, the Company evaluated the fair value of hospitals classified as held for sale and evaluated other hospitals for divestiture. In connection with this evaluation, the Company recognized $12.9 million of impairment to property and equipment during the three months ended June 30, 2017.

During the three months ended March 31, 2017, management made a decision to classify certain additional hospitals as held for sale. In connection with this decision, the Company evaluated the estimated relative fair value of the hospitals classified as held for sale in relation to the overall fair value of the hospital operations reporting unit utilizing a September 30, 2016 measurement date, which was the measurement date of the Company’s most recent annual goodwill impairment analysis. As a result, the Company recognized long-lived asset and goodwill impairment of $3.3 million during the three months ended March 31, 2017, which consisted of $1.1 million of property and equipment, $0.8 million of capitalized software costs and $1.4 million of goodwill impairment.

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2016 Impairments

During the second quarter of 2016, management made a decision to classify certain hospitals as held for sale and evaluate other hospitals for divestiture. Due to the increase in net operating losses associated with these hospitals, the Company analyzed the long-lived assets of all of its hospitals to test for impairment and recorded $45.4 million of impairment related to long-lived assets in this quarter. In addition, the Company evaluated the estimated relative fair value of the hospitals classified as held for sale in relation to the overall fair value of the hospital operations reporting unit utilizing a September 30, 2015 measurement date, which was the measurement date of the Company’s most recent annual goodwill impairment analysis, and recognized $5.0 million of goodwill impairment in the second quarter of 2016. In this same quarter, management identified certain indicators of goodwill impairment related to the hospital operations reporting unit and concluded that such indicators necessitated an interim goodwill impairment evaluation. The primary indicators were declining market capitalization, as compared to the carrying value of equity, and a decrease in estimated future earnings of the hospital operations reporting unit. The Company performed a calculation of the overall fair value of this reporting unit in step one of the impairment test and concluded that the carrying value of the hospital operations reporting unit as of June 30, 2016 exceeded the estimated fair value. The Company performed a preliminary step two calculation of goodwill impairment to determine the implied fair value of goodwill of the hospital operations reporting unit in a hypothetical purchase price allocation. Based on this preliminary analysis, the Company estimated and recorded goodwill impairment of $200 million in the second quarter of 2016.

For step two goodwill impairment testing, the Company engaged a professional valuation firm to perform a hypothetical purchase price valuation of each of its hospitals utilizing a September 30, 2016 measurement date. The results of the third-party valuation, which was completed in the fourth quarter of 2016, indicated that the carrying values of certain of the Company’s individual hospitals exceeded their fair values. Considering these results to be an indicator of potential impairment and to assess whether any additional impairment of long-lived assets existed, the Company utilized a September 30, 2016 measurement date to perform an analysis of undiscounted cash flows for each hospital in which an indicator of impairment was identified. Based on the results of these analyses, the Company recorded impairment of $82.7 million related to long-lived assets at certain hospitals and a downward adjustment to its previously recorded goodwill estimate by $80 million in the fourth quarter of 2016. The net impact in the fourth quarter of 2016, in comparison to the $200 million estimate recorded as of June 30, 2016, was $2.7 million of additional impairment beyond this initial estimate.

In addition to the above, the Company experienced a decline in operating results at several hospitals in the fourth quarter of 2016. This led management to perform additional testing for impairment using a December 31, 2016 measurement date. As a result of this analysis, the Company recorded additional impairment of $38.8 million related to long-lived assets in the fourth quarter of 2016. The carrying values of long-lived assets, including those classified as held for sale, are reported net of these impairment charges on the consolidated and combined balance sheet as of December 31, 2016.

NOTE 4 –DIVESTITURES

Trinity Hospital of Augusta

On June 30, 2017, the Company sold 231-bed Trinity Hospital of Augusta, and its affiliated outpatient facilities (“Trinity”), located in Augusta, Georgia, for $15.9 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $5.0 million and $3.6 million, respectively, related to Trinity, and pre-tax losses of $7.4 million and $5.9 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $5.0 million gain on the sale in the three months ended June 30, 2017. The Company also recorded $33.9 million of impairment to property, equipment and capitalized software costs of Trinity during the year ended December 31, 2016.

Sunbury Community Hospital and Lock Haven Hospital

On June 7, 2017, the Company announced that it had entered into a definitive agreement to sell 70-bed Sunbury Community Hospital, located in Sunbury Pennsylvania, and 47-bed Lock Haven Hospital, located in Lock Haven, Pennsylvania. The definitive agreement covers both hospitals and their affiliated outpatient facilities. The Company currently anticipates completing the sale of these hospitals in the third quarter of 2017.

McKenzie Regional Hospital and Henderson County Hospital

On May 12, 2017, the Company announced that it had entered into a definitive agreement to sell 45-bed McKenzie Regional Hospital, located in McKenzie, Tennessee, and 45-bed Henderson County Community Hospital, located in Lexington, Tennessee. The

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definitive agreement covers both hospitals and their affiliated outpatient facilities. The Company currently anticipates completing the sale of these hospitals in the third quarter of 2017.

Cherokee Medical Center

On March 31, 2017, the Company sold 60-bed Cherokee Medical Center and its affiliated outpatient facilities (“Cherokee”), located in Centre, Alabama, for $4.3 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $0.1 million and $1.0 million, respectively, related to Cherokee, and pre-tax losses of $1.0 million and $2.7 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $0.3 million gain on the sale in the six months ended June 30, 2017. The Company also recorded $3.9 million and $2.0 million of impairment to property, equipment and capitalized software costs of Cherokee during the years ended December 31, 2016 and 2015, respectively.

Barrow Regional Medical Center

Effective December 31, 2016, the Company sold 56-bed Barrow Regional Medical Center and its affiliated outpatient facilities (“Barrow”), located in Winder, Georgia, for $6.6 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $1.6 million and $2.3 million, respectively, related to Barrow and pre-tax losses of $1.0 million and $5.3 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $1.2 million loss on the sale and $4.0 million of impairment to property, equipment and capitalized software costs of Barrow during the year ended December 31, 2016.

Sandhills Regional Medical Center

Effective December 1, 2016, the Company sold 64-bed Sandhills Regional Medical Center and its affiliated outpatient facilities (“Sandhills”), located in Hamlet, North Carolina, for $7.2 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included a pre-tax gain (loss) of $1.1 million and $(0.8) million, respectively, related to Sandhills, and $0.4 million and $(1.4) million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $1.0 million loss on the sale and $4.8 million of impairment to property, equipment and capitalized software costs of Sandhills during the year ended December 31, 2016.

NOTE 5 – PROPERTY AND EQUIPMENT

The following table provides a summary of the components of property and equipment (in thousands):

	June 30,			December 31,
	2017			2016
Property and equipment, at cost:
Land and improvements	$	76,830		$	84,474
Building and improvements		750,697			782,892
Equipment and fixtures		530,652			592,463
Construction in progress		78,228			60,146
Total property and equipment, at cost		1,436,407			1,519,975
Less: Accumulated depreciation and amortization		(724,929	)		(786,075	)
Total property and equipment, net	$	711,478		$	733,900

Depreciation expense was $14.8 million and $22.5 million for the three months ended June 30, 2017 and 2016, respectively and $30.5 million and $44.9 million for the six months ended June 30, 2017 and 2016, respectively. See Note 6— Goodwill and Intangible Assets for a table on amortization expense, which includes amortization of leasehold improvement assets and property and equipment held under capital lease obligations. The total amount of assets held under capital lease obligations, at cost, was $29.2 million and $30.2 million at June 30, 2017 and December 31, 2016, respectively, and $26.5 million and $27.5 million, net of accumulated amortization, at June 30, 2017 and December 31, 2016, respectively.

Purchases of property and equipment accrued in accounts payable were $6.6 million and $15.7 million as of June 30, 2017 and December 31, 2016, respectively.

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NOTE 6 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table provides a summary of changes in goodwill (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	416,833
Acquisitions		1,202
Divestitures		(4,554	)
Reclassification to held-for-sale		(2,332	)
Impairment		(1,368	)
Balance at end of period	$	409,781

Goodwill related to the hospital operations reporting unit was $376.5 million and $383.5 million as of June 30, 2017 and December 31, 2016, respectively. Goodwill related to the hospital management advisory and consulting services reporting unit was $33.3 million at both June 30, 2017 and December 31, 2016. Goodwill related to divestitures related to the sale of Trinity.  See Note 4— Divestitures for a discussion of the divestiture of the goodwill that was written-off as part of the sale of Trinity.

See Note 3— Impairment of Long-Lived Assets and Goodwill for a discussion of the goodwill impairment charges recorded by the Company in 2017 and 2016.

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Intangible Assets

The following table provides a summary of intangible assets (in thousands):

	June 30,			December 31,
	2017			2016
Finite-lived intangible assets:
Capitalized software costs:
Cost	$	165,113		$	180,855
Accumulated amortization		(106,811	)		(118,391	)
Capitalized software costs, net		58,302			62,464
Physician guarantee contracts:
Cost		7,990			11,355
Accumulated amortization		(4,457	)		(6,329	)
Physician guarantee contracts, net		3,533			5,026
Other finite-lived intangible assets:
Cost		43,883			44,342
Accumulated amortization		(33,707	)		(33,059	)
Other finite-lived intangible assets, net		10,176			11,283
Total finite-lived intangible assets
Cost		216,986			236,552
Accumulated amortization		(144,975	)		(157,779	)
Total finite-lived intangible assets, net	$	72,011		$	78,773
Indefinite-lived intangible assets:
Tradenames	$	4,000		$	4,000
Medical licenses and other indefinite-lived intangible assets		1,683			2,209
Total indefinite-lived intangible assets	$	5,683		$	6,209
Total intangible assets:
Cost	$	222,669		$	242,761
Accumulated amortization		(144,975	)		(157,779	)
Total intangible assets, net	$	77,694		$	84,982

As of June 30, 2017, the Company had $3.4 million of capitalized software costs that are currently in the development stage. Amortization of these capitalized costs will begin once the software projects are complete and ready for their intended use.

See Note 3— Impairment of Long-Lived Assets and Goodwill for a discussion of the intangible asset impairment charges recorded by the Company in 2017 and 2016.

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Amortization Expense

The following table provides a summary of the components of amortization expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Amortization of finite-lived intangible assets:
Capitalized software costs	$	3,796	$	6,730	$	8,539	$	13,325
Physician guarantee contracts		599		902		1,156		1,613
Other finite-lived intangible assets		556		759		1,126		1,516
Total amortization expense related to finite-lived intangible assets		4,951		8,391		10,821		16,454
Amortization of leasehold improvements and property and equipment assets held under capital lease obligations		882		610		1,338		1,293
Total amortization expense	$	5,833	$	9,001	$	12,159	$	17,747

As of June 30, 2017, the weighted-average remaining amortization period of the Company’s intangible assets subject to amortization, except for capitalized software costs and physician guarantee contracts, was approximately 5.0 years.

NOTE 7 – LONG-TERM DEBT

The following table provides a summary of the components of long-term debt (in thousands):

	June 30,			December 31,
	2017			2016
Senior Credit Facility:
Revolving Credit Facility, maturing 2021	$	—		$	—
Term Loan Facility, maturing 2022		857,587			868,419
ABL Credit Facility, maturing 2021		50,000			—
Senior Notes, maturing 2023		400,000			400,000
Unamortized debt issuance costs and discounts		(47,498	)		(48,764	)
Capital lease obligations		25,000			25,588
Other debt		1,281			1,582
Total debt		1,286,370			1,246,825
Less:  Current maturities of long-term debt		(1,649	)		(5,683	)
Total long-term debt	$	1,284,721		$	1,241,142

In connection with the Spin-off, the Company entered into two credit agreements and issued senior notes. In addition, the previous indebtedness with CHS, which was classified on the consolidated and combined balance sheets as Due to Parent, net was fully settled. See Note 1 — Description of the Business and Spin-off and Note 16 — Related Party Transactions for additional information on the use of proceeds from the new debt instruments and the settlement of Due to Parent, net.

Senior Credit Facility

On April 29, 2016, the Company entered into the CS Agreement, among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent. On April 11, 2017, the Company executed the CS Amendment with its Senior Credit Facility lenders to amend certain provisions of its Senior Credit Facility, as described below.

The CS Agreement initially provided for an $880 million senior secured term loan facility and a $100 million senior secured revolving credit facility. The Term Loan Facility was issued at a discount of $17.6 million, or 98% of par value, and has a maturity date of April 29, 2022, subject to customary acceleration events and repayment, extension or refinancing. The Revolving Credit Facility has a maturity date of April 29, 2021, subject to certain customary acceleration events and repayment, extension or refinancing. The CS Amendment reduced the Revolving Credit Facility’s borrowing capacity from $100 million to $87.5 million until December 31, 2017, at which time the borrowing capacity decreases to $75.0 million.

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The CS Agreement contains customary covenants, including a maximum permitted Secured Net Leverage Ratio, as determined based on 12 month trailing Consolidated EBITDA, as defined in the CS Agreement. On April 11, 2017, the Company executed the CS Amendment with its Senior Credit Facility lenders to amend the calculation of the Secured Net Leverage Ratio beginning January 1, 2017 to December 31, 2018, among other provisions. The CS Amendment raised the maximum Secured Net Leverage Ratio required for the Company to remain in compliance for certain periods, and also changed the calculation of compliance for specified periods As of June 30, 3017 and December 31, 2016, the Company had a Secured Net Leverage Ratio of 3.85 to 1.00 and 3.93 to 1.00, respectively, implying additional borrowing capacity of $154.6 million as of June 30, 2017.

After giving effect to the CS Amendment, the maximum Secured Net Leverage Ratio permitted under the CS Agreement, as determined based on 12 month trailing Consolidated EBITDA and as defined in the CS Agreement, follows:

	Maximum
	Secured Net
Period	Leverage Ratio
Period from January 1, 2017 to June 30, 2017	4.50 to 1.00
Period from July 1, 2017 to December 31, 2018	4.75 to 1.00
Period from January 1, 2019 and thereafter	4.00 to 1.00

In addition to amending the calculation of the Secured Net Leverage Ratio and the maximum Secured Net Leverage Ratio, the CS Amendment also affects other terms of the CS Agreement as follows:

• Through December 31, 2018, the Company is required to use asset sales proceeds to make mandatory redemptions under the Term Loan Facility. After December 31, 2018, the Company is required to use asset sale proceeds to make mandatory redemptions under the Term Loan Facility to the extent those proceeds are not expected to be reinvested within 15 months.

• Through December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments, as defined in the CS Agreement, only if the Secured Net Leverage Ratio, adjusted for the requested Incremental Term Loan borrowing, is below 3.35 to 1.00. After December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments for the greater of $100 million or an amount which would produce a Secured Net Leverage Ratio of 3.35 to 1.00.

• Through December 31, 2018, the Company is allowed to incur Permitted Additional Debt, as defined in the CS Agreement, only if the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 4.50 to 1.00. After December 31, 2018, the Company may incur Permitted Additional Debt so long as the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 5.50 to 1.00.

Prior to the CS Amendment, interest under the Term Loan Facility accrued, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 5.75%, or the alternate base rate plus 4.75%. Following the CS Amendment, interest under the Term Loan Facility accrues, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 6.75%, or the alternate base rate plus 5.75%. The effective interest rate on the Term Loan Facility was 8.79% as of June 30, 2017. Interest under the Revolving Credit Facility accrues, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 0% plus 2.75%, or the alternate base rate plus 1.75%, and remains unchanged under the CS Amendment.

Borrowings from the Revolving Credit Facility are used for working capital and general corporate purposes. As of June 30, 2017, the Company had no borrowing outstanding under the Revolving Credit Facility and had $10.3 million of letters of credit outstanding that were primarily related to the self-insured retention levels of professional and general liability and workers’ compensation liability insurance as security for the payment of claims. As of June 30, 2017, the Company had borrowing capacity under its Revolving Credit Facility of $77.2 million.

ABL Credit Facility

On April 29, 2016, the Company entered into an ABL Credit Agreement (the “UBS Agreement,” and together with the CS Agreement, collectively, the “Credit Agreements”), among the Company, the lenders party thereto and UBS AG, Stamford Branch (“UBS”), as administrative agent and collateral agent. The UBS Agreement provides for a $125 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”). The available borrowings from the ABL Credit Facility, which are based on

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eligible patient accounts receivable, are used for working capital and general corporate purposes. As of June 30, 2017, the Company had $50.0 million outstanding on the ABL Credit Facility and borrowing capacity of $75.0 million.

On April 11, 2017, the Company executed an amendment to the UBS Agreement with its lender party thereto, which aligned the provisions of the UBS Agreement with the CS Agreement. There were no changes to the UBS Agreement that impact the Company’s current interest or covenant calculations associated with the ABL Credit Facility.

The ABL Credit Facility has a maturity date of April 29, 2021, subject to customary acceleration events and repayment, extension or refinancing. Interest under the ABL Credit Facility accrues, at the option of the Company, at a base rate or LIBOR, subject to statutory reservesand a floor of 0%,except that all swingline borrowings will accrue interest based on the base rate, plus an applicable margin determined by the average excess availability under the ABL Credit Facility for the fiscal quarter immediately preceding the date of determination. The applicable margin ranges from 1.75% to 2.25% for LIBOR advances and from 0.75% to 1.25% for base rate advances.

The ABL Credit Facility has a “Covenant Trigger Event” definition that requires the Company to maintain excess availability under the ABL Credit Facility equal to or greater than the greater of (i) $12.5 million and (ii) 10% of the aggregate commitments under the ABL Credit Facility. If a Covenant Trigger Event occurs, then the Company is required to maintain a minimum Consolidated Fixed Charge Ratio of 1.10 to 1.00 until such time that a Covenant Trigger Event is no longer continuing. In addition, if excess availability under the ABL Credit Facility were to fall below the greater of (i) 12.5% of the aggregate commitments under the ABL Credit Facility and (ii) $15.0 million, then a “Cash Dominion Event” would be triggered upon which the lenders could assume control of the Company’s cash.

Credit Agreement Covenants

In addition to the specific covenants described above, the Credit Agreements contain customary negative covenants which limit the Company’s ability to, among other things, incur additional indebtedness, create liens, make investments, transfer assets, merge or acquire assets, and make restricted payments, including dividends, distributions and specified payments on other indebtedness. They include customary events of default, including payment defaults, material breaches of representations and warranties, covenant defaults, default on other material indebtedness, customary Employee Retirement Income Security Act (“ERISA”)events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business. The Credit Agreements also contain customary affirmative covenants and representations and warranties.

Senior Notes

On April 22, 2016, the Company issued $400 million aggregate principal amount of 11.625% Senior Notes due 2023, pursuant to the Indenture. The Senior Notes were issued at a discount of $6.9 million, or 1.734%, in a private placement and are senior unsecured obligations of the Company guaranteed on a senior basis by certain of the Company’s subsidiaries (the “Guarantors”). The Senior Notes mature on April 15, 2023 and bear interest at a rate of 11.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016. Interest on the Senior Notes accrues from the date of original issuance and is calculated on the basis of a 360-day year comprised of twelve 30-day months. The effective interest rate on the Senior Notes was 12.48% as of June 30, 2017.

The Indenture contains covenants that, among other things, limit the ability of the Company and certain of its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, create or incur certain liens, sell assets and subsidiary stock, transfer all or substantially all of its assets or enter into merger or consolidation transactions.

On May 17, 2017, the Company exchanged the 11.625% Senior Notes due 2023 (the “Initial Notes”) in the aggregate principal amount of $400 million, which were not registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of 11.625% Senior Notes due 2023 (the “Exchange Notes”), which have been registered under the Securities Act (the “Exchange Offer”). The Exchange Notes are substantially identical to the Initial Notes, except that the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Initial Notes.

On and after April 15, 2019, the Company is entitled, at its option, to redeem all or a portion of the Senior Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices specified in the table below, plus accrued and unpaid interest, if any, through the redemption date. The redemption prices are expressed as a percentage of the principal amount on the redemption date. Holders of record on the relevant record date have the right to receive interest due on the relevant interest payment date. In addition, prior to April 15, 2019, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the

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principal amount thereof, plus accrued and unpaid interest, if any, plus a “make whole” premium, as set forth in the Indenture. The Company is entitled to redeem up to 35% of the aggregate principal amount of the Senior Notes until April 15, 2019 with the net proceeds from certain equity offerings at the redemption price set forth in the Indenture.

The following table provides a summary of the redemption periods and prices related to the Senior Notes:

	Redemption
Period	Prices
Period from April 15, 2019 to April 14, 2020		108.719	%
Period from April 15, 2020 to April 14, 2021		105.813	%
Period from April 15, 2021 to April 14, 2022		102.906	%
Period from April 15, 2022 to April 14, 2023		100.000	%

Debt Issuance Costs and Discounts

The following table provides a summary of unamortized debt issuance costs and discounts (in thousands):

	June 30,			December 31,
	2017			2016
Debt issuance costs	$	32,084		$	29,146
Debt discounts		24,536			24,536
Total debt issuance costs and discounts		56,620			53,682
Less:  Amortization of debt issuance costs and discounts		(9,122	)		(4,918	)
Total unamortized debt issuance costs and discounts	$	47,498		$	48,764

Capital Lease Obligations and Other Debt

The Company’s debt arising from capital lease obligations primarily relates to the Company’s corporate office in Brentwood, Tennessee. As of June 30, 2017, this capital lease obligation was $18.3 million. The remainder of the Company’s capital lease obligations primarily relate to property and equipment at its hospitals and corporate office. Other debt consists of physician loans and miscellaneous notes payable to banks.

Debt Maturities

The following table provides a summary of debt maturities for the next five years and thereafter (in thousands):

	June 30, 2017
Remainder of 2017	$	919
2018		7,820
2019		10,168
2020		10,251
2021		10,356
Thereafter		1,294,354
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868

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Interest Expense, Net

The following table provides a summary of the components of interest expense, net (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Senior Credit Facility:
Revolving Credit Facility	$	192		$	85		$	331		$	85
Term Loan Facility		16,642			10,432			31,283			10,432
ABL Credit Facility		613			82			869			82
Senior Notes		11,629			8,914			23,255			8,914
Amortization of debt issuance costs and discounts		2,224			1,191			4,204			1,191
All other interest expense (income), net		(842	)		(359	)		(1,954	)		210
Total interest expense, net, from long-term debt		30,458			20,345			57,988			20,914
Due to Parent, net		—			8,931			-			35,814
Total interest expense, net	$	30,458		$	29,276		$	57,988		$	56,728

NOTE 8 – OTHER LONG-TERM LIABILITIES

The following table provides a summary of the components of other long-term liabilities (in thousands):

	June 30,		December 31,
	2017		2016
Professional and general liability insurance reserves	$	80,005	$	74,194
Workers' compensation liability insurance reserves		20,164		17,416
Benefit plan liabilities		36,028		10,722
Deferred rent		3,492		4,001
Other miscellaneous long-term liabilities		2,067		2,663
Total other long-term liabilities	$	141,756	$	108,996

See Note 17 — Commitments and Contingencies for additional information about the Company’s insurance reserves and Note 15 — Employee Benefit Plans for additional information about the Company’s benefit plan liabilities.

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company’s cash and cash equivalents, patient accounts receivable, amounts due from and due to third-party payors, and accounts payable approximate their fair values due to the short-term maturity of these financial instruments.

The Company recorded impairment charges related to long-lived assets and goodwill during the three and six months ended June 30, 2017 and the year ended December 31, 2016. See Note 3 — Impairment of Long-Lived Assets and Goodwill. The assessment of fair value was based on Level 3 inputs, as the valuation methodologies used to determine impairment were based on internal projections and unobservable inputs. The portion of impairment related to hospital assets held for sale was determined based on Level 2 inputs, as the valuation methodologies used to determine impairment considered letters of intent received on these hospitals.

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The following table provides a summary of the carrying amounts and estimated fair values of the Company’s long-term debt (in thousands):

	June 30, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Revolving Credit Facility	$	—	$	—	$	—	$	—
Term Loan Facility		857,587		860,803		868,419		849,427
ABL Credit Facility		50,000		50,000		—		—
Senior Notes		400,000		355,980		400,000		334,720
Other debt		26,281		26,281		27,170		27,170
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868	$	1,293,064	$	1,295,589	$	1,211,317

The Company considers its long-term debt instruments to be measured based on Level 2 inputs. Information about the valuation methodologies used in the determination of the fair values for the Company’s long-term debt instruments follows:

• Term loan facility. The estimated fair value is based on publicly available trading activity and supported with information from the Company’s lending institutions regarding relevant pricing for trading activity.

• Senior notes. The estimated fair value is based on the closing market price for these notes.

• All other debt. The carrying amounts of the Company’s debt instruments, including the revolving credit facility, ABL credit facility, capital lease obligations, physician loans and miscellaneous notes payable to banks, approximate their estimated fair values due to the nature of these obligations.

NOTE 10 – EQUITY

Preferred Stock

In connection with the Spin-off, the Company authorized 100,000,000 shares of preferred stock, par value of $0.0001 per share. No shares have been issued as of June 30, 2017. The Board has the discretion, subject to limitations prescribed by Delaware law and by its amended and restated certificate of incorporation, to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock, when and if issued.

Common Stock

In connection with the Spin-off, the Company authorized 300,000,000 shares of common stock, par value of $0.0001 per share, and issued 28,412,054 shares of common stock on April 29, 2016 to CHS stockholders of record on the Record Date, or April 22, 2016. The common stock began trading on the NYSE on May 2, 2016 under the ticker symbol “QHC.” As of June 30, 2017 and December 31, 2016, the Company had 30,297,524 shares and 29,482,050 shares, respectively, of common stock issued and outstanding.

Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters for which stockholders may vote. Holders of the Company’s common stock will not have cumulative voting rights in the election of directors. There are no preemptive rights, conversion, redemption or sinking fund provisions applicable to the common stock. In the event of liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in the assets available for distribution. Delaware law prohibits the Company from paying any dividends unless it has capital surplus or net profits available for this purpose. In addition, the Company’s Credit Agreements impose restrictions on its ability to pay dividends.

Additional Paid-in Capital

In connection with the Spin-off, the Company issued common stock, as described above, to CHS stockholders. In addition, pursuant to the Separation and Distribution Agreement, CHS contributed capital in excess of par value of common stock of $530.6 million, in lieu of a cash settlement payment, related to the remaining intercompany indebtedness with CHS and the Parent’s equity

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attributable to CHS. See Note 1 — Description of the Business and Spin-off for a summary of the major transactions to effect the Spin-off.

Accumulated Deficit

Accumulated deficit of the Company, as shown on the consolidated and combined balance sheets as of June 30, 2017 and December 31, 2016, represents the Company’s cumulative net losses since the Spin-off date. The cumulative earnings and losses of the Company prior to the Spin-off were included in Due to Parent, net on the consolidated and combined balance sheets.

NOTE 11 – INCOME TAXES

The Company, or one of its subsidiaries, is subject to U.S. federal income tax and income tax of multiple state and local jurisdictions. The Company provides for income taxes based on the enacted tax laws and rates in jurisdictions in which it conducts its operations. Prior to the Spin-off, the Company was included in the consolidated federal, state and local income tax returns filed by CHS and calculated income taxes for the purpose of carve-out financial statements using the “separate return method.” The Company deemed the amounts that it would have paid to or received from the U.S. Internal Revenue Service and certain state jurisdictions, had QHC not been a member of CHS’ consolidated tax group, to be immediately settled with CHS through Due to Parent, net in the consolidated and combined balance sheets. The Company is filing its own consolidated federal, state and local income tax returns after the Spin-off.

The Company’s effective tax rates were 0.8% and 15.4% for the three months ended June 30, 2017 and 2016, respectively and (0.8)% and 15.7% for the six months ended June 30, 2017 and 2016, respectively. The decrease in the Company’s effective tax rate for the three and six months ended June 30, 2017, when compared to the three and six months ended June 30, 2016, was primarily due to recording a valuation allowance against the deferred tax assets arising from the Company’s pre-tax loss in the 2017 period that are not more likely than not to be recognized.

The Company’s deferred income tax liabilities, net were $31.7 million as of June 30, 2017, compared to $31.5 million as of December 31, 2016, a $0.2 million increase. This increase was primarily due to a deferred tax provision for tax deductible amortization on indefinite-lived intangible assets and goodwill, net of a deferred tax benefit on the impairment of goodwill related to the reclassification of QHC hospitals to assets held for sale in the 2017 period.

In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. The Company assesses its income tax positions and records income tax benefits for all tax years subject to examination based on management’s evaluation of the facts, circumstances, and information available at the reporting date. The Company is not aware of any unrecognized tax benefits; therefore, it has not recorded any such amounts for the three and six months ended June 30, 2017 and 2016.

NOTE 12 – EARNINGS PER SHARE

The following table provides a summary of the computation of basic and diluted earnings (loss) per share (in thousands, except earnings per share and shares):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator:
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		55			1,095			411			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	(245,061	)	$	(58,191	)	$	(250,063	)
Denominator:
Weighted-average shares outstanding - basic and diluted		28,145,215			28,412,720			27,977,738			28,412,389
Basic and diluted earnings (loss) per share attributable to Quorum Health Corporation stockholders	$	(1.09	)	$	(8.63	)	$	(2.08	)	$	(8.80	)

For comparative purposes, the Company used 28,412,054 shares as the number of basic and diluted shares outstanding for all periods prior to the Spin-off in calculating basic and diluted earnings (loss) per share. This number of shares represents the number of

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shares issued on the Spin-off date. Due to the net losses attributable to Quorum Health Corporation in the three and six months ended June 30, 2017 and 2016, no incremental shares were included in diluted earnings (loss) per share for these periods because the effect of the incremental shares would be anti-dilutive. No incremental shares were considered for any periods prior to the Spin-off.

NOTE 13 – SEGMENTS

The Company operates in two distinct operating segments, its hospital operations business and its hospital management advisory and healthcare consulting services business. The hospital operations segment includes the operations of the Company’s owned and leased hospitals and their affiliated outpatient facilities that provide inpatient and outpatient healthcare services. The hospital management advisory and healthcare consulting services segment includes the operations of QHR. Only the hospital operations segment meets the criteria as a separate reportable segment. The financial information for QHR has been combined with the Company’s corporate functions and reported below as part of the all other reportable segment

Prior to the Spin-off, the Company included management fees allocated from Parent in the operating expenses of the hospital operations segment. Following the Spin-off, the Company began presenting general and administrative costs for corporate functions in the all other reportable segment.

The following tables provide a summary of financial information related to the Company’s segments (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Net operating revenues:
Hospital operations	$	509,118		$	508,906	$	1,015,536		$	1,036,317
All other		21,028			20,831		42,250			42,971
Total net operating revenues	$	530,146		$	529,737	$	1,057,786		$	1,079,288
Adjusted EBITDA:
Hospital operations	$	41,536		$	26,457	$	79,002		$	75,396
All other		(7,106	)		2,775		(18,430	)		10,060
Total Adjusted EBITDA	$	34,430		$	29,232	$	60,572		$	85,456

	June 30,		December 31,
	2017		2016
Assets:
Hospital operations	$	1,759,694	$	1,802,121
All other		227,807		192,249
Total assets	$	1,987,501	$	1,994,370

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The following table provides a reconciliation of Adjusted EBITDA to net income (loss), its most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Adjusted EBITDA	$	34,430		$	29,232		$	60,572		$	85,456
Interest expense, net		(30,458	)		(29,276	)		(57,988	)		(56,728	)
(Provision for) benefit from income taxes		245			44,565			(456	)		46,239
Depreciation and amortization		(20,586	)		(31,463	)		(42,706	)		(62,620	)
Legal, professional and settlement costs		(3,934	)		(5,447	)		(4,469	)		(5,688	)
Impairment of long-lived assets and goodwill		(12,900	)		(250,400	)		(16,200	)		(250,400	)
Gain (loss) on sale of hospitals, net		4,321			—			5,191			—
Transaction costs related to the Spin-off		—			(1,177	)		(31	)		(4,912	)
Post-spin headcount reductions		(1,693	)		—			(1,693	)		—
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)

NOTE 14 – STOCK-BASED COMPENSATION

On April 1, 2016, the Company adopted the Quorum Health Corporation 2016 Stock Award Plan (“2016 Stock Award Plan”). The Company filed a Registration Statement on Form S-8 on April 29, 2016 to register 4,700,000 shares of QHC common stock that may be issued under the plan.

As defined in the Separation and Distribution Agreement, QHC and CHS employees who held CHS restricted stock awards on the Record Date received QHC restricted stock awards for the number of whole shares, rounded down, of QHC common stock that they would have received as a shareholder of CHS as if the underlying CHS stock were unrestricted on the Record Date, except, that with respect to a portion of CHS restricted stock awards granted to any QHC employees on March 1, 2016, as discussed above, that were cancelled and forfeited on the Spin-off date. The QHC restricted stock awards received by QHC and CHS employees in connection with the Spin-off vest on the same terms as the CHS restricted stock awards to which they relate, through the continued service by such employees with their respective employer. CHS restricted stock awards were adjusted by increasing the number of shares of CHS stock subject to restricted stock awards by an amount of whole shares, rounded down, necessary to preserve the intrinsic value of such awards at the Spin-off date. QHC did not issue any stock options as part of the distribution of shares to holders of CHS stock options.

On April 28, 2017, the Compensation Committee of the Board of Directors (the “Compensation Committee”), and the Governance and Nominating Committee of the Board of Directors (the “Governance and Nominating Committee”), granted 168,618 time-vested restricted stock awards to its non-employee directors. The grants were made pursuant to the 2016 Stock Award Plan and a director restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse on February 22, 2018.

On February 22, 2017, the Compensation Committee granted 230,000 performance-based restricted stock awards to the Company’s executive officers. The grants were made pursuant to the 2016 Stock Award Plan and a performace-based restricted stock award agreement. If the performance-based objectives are attained in accordance with the targets set forth in the performance-based restricted stock award agreement, the restrictions on the restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On February 22, 2017, the Compensation Committee granted 230,000 time-based restricted stock awards to the Company’s executive officers, as well as 420,000 time-based restricted stock awards to certain employees of the Company. The grants were made pursuant to the 2016 Stock Award Plan and a restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On May 3, 2016, the Compensation Committee granted 460,000 performance-based restricted stock awards to the Company’s executive officers. The grants were made pursuant to the 2016 Stock Award Plan and a performance-based restricted stock award agreement. If the performance-based objectives are attained in accordance with the targets set forth in the performance-based restricted stock award agreement, the restrictions on the restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On May 3, 2016, the Compensation Committee granted 551,005 time-vested restricted stock awards to certain employees of the Company. The grants were made pursuant to the 2016 Stock Award Plan and a restricted stock award agreement. The restrictions on

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the time-vested restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date, except for 106,005 restricted stock awards, referred to by the Company as recoupment awards, which have a different vesting period. The recoupment awards were issued to a select group of QHC employees that were granted restricted stock awards by CHS on March 1, 2016. Pursuant to the Separation and Distribution Agreement, two-thirds of the shares granted to the QHC employee group on this grant date were canceled by CHS in connection with the Spin-off. The recoupment awards were issued by QHC and included in the May 3, 2016 grant of QHC restricted stock awards for the purpose of restoring the benefit previously provided by CHS to this employee group. Restrictions on the recoupment awards lapse in equal installments on the second and third anniversaries of the grant date.

On May 3, 2016, the Board, upon recommendation of its Compensation Committee and its Governance and Nominating Committee, granted 10,000 time-vested restricted stock awards to each of its seven non-employee directors. The grants were made pursuant to the 2016 Stock Award Plan and a director restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse on the first anniversary of the grant date.

The following table provides a summary of the activity related to unvested QHC restricted stock awards held by QHC and CHS employees during the six months ended June 30, 2017 that were distributed in the Spin-off (in shares):

	QHC Awards Distributed in Spin-off
	QHC Employees			CHS Employees			Total
Unvested restricted stock awards at December 31, 2016		52,462			621,525			673,987
Vested		(34,009	)		(202,286	)		(236,295	)
Forfeited		(14,129	)		(138,844	)		(152,973	)
Unvested restricted stock awards at June 30, 2017		4,324			280,395			284,719

The following table provides a summary of the activity related to unvested restricted stock awards during the six months ended June 30, 2017 that were granted to QHC employees subsequent to the Spin-off:

	QHC Awards Granted
	Subsequent to Spin-off
				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock awards at December 31, 2016		1,081,005		$	12.77
Granted		1,093,618			7.64
Vested		(282,582	)		12.77
Forfeited		(125,069	)		12.43
Unvested restricted stock awards at June 30, 2017		1,766,972			9.62

Following the Spin-off, the Company began recording stock-based compensation expense related to the vesting of QHC restricted stock awards issued to QHC employees on the Spin-off date, CHS restricted stock awards held by QHC employees on the Spin-off date, and restricted stock awards granted by QHC on May 3, 2016. Stock-based compensation expense is recorded in salaries and benefits for periods following the Spin-off. Prior to the Spin-off, an estimated portion of CHS’ stock-based compensation expense was allocated to QHC through the monthly corporate management fee from CHS, which was included in other operating expenses in the consolidated and combined statements of income, and therefore not included in stock-based compensation expense in the table below. The estimated costs allocated to QHC from CHS for stock-based compensation were $0.6 million and $2.3 million for the three and six months ended June 30, 2016, respectively.

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The following table provides a summary of stock-based compensation expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Stock-based compensation resulting from the Spin-off	$	448	$	809	$	1,364	$	809
Stock-based compensation related to grants following the Spin-off		2,083		1,088		3,964		1,088
Total stock-based compensation expense	$	2,531	$	1,897	$	5,328	$	1,897

As of June 30, 2017, the Company had $1.2 million of unrecognized stock-based compensation expense related to the outstanding unvested QHC and CHS restricted stock awards held by QHC employees as of the Spin-off date and $13.3 million of unrecognized stock-based compensation expense related to the QHC restricted stock awards granted subsequent to the Spin-off.

NOTE 15 – EMPLOYEE BENEFIT PLANS

Following the Spin-off, the Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, of which certain of the Company’s subsidiaries are the plan sponsors. The rights and obligations of these plans were transferred from CHS in connection with the Spin-off, pursuant to the Separation and Distribution Agreement.

Defined Contribution Plans

The Quorum Health Retirement Savings Plan (the “RSP”) is a defined contribution plan established on January 1, 2016 by CHS in anticipation of the Spin-off. Prior to the Spin-off, the cumulative liability for these benefit costs was recorded in Due to Parent, net. The assets and liabilities under this plan were transferred to QHC in connection with the Spin-off. The RSP covers the majority of the employees at the Company’s subsidiaries. The Company has other minor defined contribution plans at certain of its hospitals that cover employees under the terms of these individual plans. Total expense to the Company under all defined contribution plans was $4.0 million and $3.7 million for the three months ended June 30, 2017 and 2016, respectively, and $6.9 million and $7.0 million for the six months ended June 30, 2017 and 2016, respectively. The benefit costs associated with the RSP are recorded as salaries and benefits expense in the consolidated and combined statements of income.

Deferred Compensation Plans

Certain QHC employees participated in CHS’ unfunded deferred compensation plans that allowed participants to defer receipt of a portion of their compensation. The election period for those employees continued under the CHS plan through December 31, 2016. In January, 2017, the assets and liabilities attributable to QHC employees of $22.9 million and $23.9 million, respectively, were transferred to a new plan established by QHC, as described below.

On August 18, 2016, the Compensation Committee of the Board adopted the Executive Nonqualified Excess Plan Adoption Agreement (the “Adoption Agreement”) and the Executive Nonqualified Excess Plan Document (the “Plan Document”), that together, the Adoption Agreement names as the QHCCS, LLC Nonqualified Deferred Compensation Plan (the “NQDCP”). The NQDCP is an unfunded, nonqualified deferred compensation plan that provides deferred compensation benefits for a select group of management, highly compensated employees and independent contractors of the Company’s wholly-owned subsidiary, QHCCS, LLC (“QHCCS”), a Delaware limited liability company, including the Company’s named executive officers. The NQDCP permits participants to defer a portion of their annual base salary, service bonus and performance-based compensation, as well as up to 100% of their incentive compensation in any calendar year. In addition to participant deferrals, QHCCS and/or its affiliates may make discretionary credits to participants’ accounts for any year. As of June 30, 2017, the assets and liabilities under this plan were $23.4 million and $24.5 million, respectively, and are included in other long-term assets and other long-term liabilities in the consolidated and combined balance sheet.

Supplemental Executive Retirement Plan

On April 1, 2016, the Board adopted the Quorum Health Corporation Supplemental Executive Retirement Plan (the “Original SERP Plan”). Pursuant to the Employee Matters Agreement between the Company and CHS, the Company assumed all liabilities for all obligations under the Original SERP Plan for the benefits of QHC employees, as defined in the Employee Matters Agreement, except that no additional benefits were to accrue under the Original SERP Plan following the Spin-off. The accrued benefit liability for the Original SERP Plan that was transferred to the Company in connection with the Spin-off was $6.0 million and is included in

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other long-term liabilities in the consolidated and combined balance sheet. There were no assets transferred to the Company related to the Original SERP Plan in connection with the Spin-off.

On May 24, 2016, the Board, upon recommendation of the Compensation Committee, approved the Company’s Amended and Restated Supplemental Executive Retirement Plan (the “Amended and Restated SERP”), in order to accrue additional benefits with respect to QHC Employees who otherwise qualify as “Participants” under the Amended and Restated SERP. The Amended and Restated SERP is a noncontributory non-qualified deferred compensation plan under Section 409A of the Internal Revenue Code. The benefit costs under both SERP plans were $0.5 million for the three months ended June 30, 2017 and $1.0 million for the six months ended June 30, 2017, and are included in salaries and benefits in the consolidated and combined statements of income. The current and long-term portions of the benefit liability for the Amended and Restated SERP were $2.3 million and $8.0 million, respectively as of June 30, 2017. As of December 31, 2016, the current and long-term portions of the benefit liability were $2.3 million and $7.1 million, respectively. The current portion is included in accrued salaries and benefits and the long-term portion is included in other long-term liabilities in the consolidated and combined balance sheet.

Director’s Fees Deferral Plan

On September 16, 2016, the Board adopted the Quorum Health Corporation Director’s Fees Deferral Plan (the “Director’s Plan”). Pursuant to the Director’s Plan, members of the Board may elect to defer and accumulate fees, including retainer fees and fees for attendance at Board meetings and Board committees. A director may elect that all or any specified portion of the director’s fees to be earned during a calendar year be credited to a director’s cash account and/or a director’s stock unit account maintained on the individual director’s behalf in lieu of payment. Payment of amounts credited to a director’s cash account and stock unit account will be made upon a payment commencement event, as defined in the Director’s Plan, in accordance with the payment method elected by the individual director, either in lump sum or in a number of annual installments, not to exceed 15 installments. The Director’s Plan extends to directors of the Board not employed by the Company or any of its subsidiaries. Pursuant to the Director’s Plan, the Company registered and made available for issuance under the Director’s Plan a maximum of 150,000 shares of QHC common stock.

Defined Benefit Pension Plan

QHC provides benefits to employees at one of its hospitals through a defined benefit plan (the “Pension Plan”). The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements. Employer contributions to the Pension Plan are in accordance with the minimum funding requirements of ERISA. Benefit costs related to the Pension Plan was $0.1 million and $0.1 million for the three months ended June 30, 2017 and 2016, respectively, and $0.2 million and $0.1 million for the six months ended June 30, 2017 and 2016, respectively. The Company recognizes the unfunded liability of the Pension Plan in other long-term liabilities in its consolidated and combined balance sheets. Unrecognized gains (losses) and prior service credits (costs) are recognized as other comprehensive income (loss). The accrued benefit liability for the Pension Plan was $1.1 million and $1.1 million at June 30, 2017 and December 31, 2016, respectively.

NOTE 16 – RELATED PARTY TRANSACTIONS

CHS was a related party to QHC prior to the Spin-off. The significant transactions and balances with CHS prior to the Spin-off and the agreements between QHC and CHS as of and subsequent to the Spin-off are described below.

Carve-Out from Parent

Prior to the Spin-off, QHC did not operate as a separate company and stand-alone financial statements were not prepared. Historically, QHC was managed and operated in the normal course of business with all other hospitals and affiliates of CHS. Accordingly, for the purposes of the carve-out financial statements related to the Spin-off, a combined opening balance sheet for the QHC hospitals and QHR was established. The combined opening balance sheet included the assets and liabilities of QHC hospitals and QHR, as reported by CHS, and a net liability to CHS, referred to as Due to Parent, net for the net investment held by CHS related to its contribution of these net assets. The operating results of the QHC hospitals and QHR prior to the Spin-off were derived from the CHS operating results for these entities. In addition, certain corporate overhead costs were allocated to QHC from CHS during the carve-out period for the purpose of estimating QHC’s share of these expenses.

Allocated Costs from CHS during the Carve-Out Period

CHS allocated costs to QHC during the carve-out period for a portion of its corporate overhead costs and any other costs related to QHC hospitals and QHR that were paid by CHS or covered by an agreement, policy or contract owned by CHS.

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The following table provides a summary of allocated costs to QHC from CHS (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016
Insurance costs	$	10,486	$	44,246
Management fees from Parent		2,966		11,792
All other allocated costs		5,305		25,021
Total related party operating costs and expenses	$	18,757	$	81,059

The allocation of insurance costs from CHS primarily included costs for self-insurance estimates and third-party policies related to employee health, professional and general liability and workers’ compensation liability coverage. Insurance costs were primarily allocated to QHC based on claims history of the QHC hospitals, as determined on an individual hospital level. Corporate management fees were allocated to QHC for certain corporate functions of CHS, including services such as, among others, executive and divisional management, treasury, accounting, risk management, legal, procurement, human resources, information technology support and other administrative support services. These corporate overhead costs were allocated to QHC using a ratio based on the number of licensed beds at each QHC hospital in proportion to CHS’ total licensed beds. This methodology is comparable to how CHS allocates corporate overhead costs to all of its hospitals through a management fee charge that eliminates in consolidation. All other allocated costs included any other costs allocated to QHC hospitals or QHR and that were not part of management fees. These costs were allocated to QHC using ratios based on revenues, expenses or licensed beds. If possible, allocations were made on a specific identification basis.

Following the Spin-off, the Company began performing corporate functions using internal resources or purchased services, certain of which are required to be provided by CHS pursuant to the transition services agreements and other ancillary agreements. See the section “Agreements with CHS Related to the Spin-off” below.

Due to Parent, Net

Prior to the Spin-off, Due to Parent, net in the consolidated and combined balance sheets represented the Company’s cumulative liability to CHS for the net assets of QHC hospitals and QHR, as well as an allocation of costs for corporate functions. See Note 1 — Description of the Business and Spin-off and Note 2 — Basis of Presentation and Significant Accounting Policies for additional information on the types of transactions settled through Due to Parent, net during the carve-out period and the transactions that occurred to settle the liability in connection with the Spin-off.

During the carve-out period, QHC was charged interest on a monthly basis by CHS on the amount of Due to Parent, net outstanding at the end of each month. Interest rates were variable and ranged from 4% to 7% during the carve-out period. Interest expense was recorded as an increase in the Due to Parent, net liability and was deemed settled each month. For the three and six months ended June 30, 2016, interest expense related to Due to Parent, net was $8.9 million and $35.8 million, respectively.

Agreements with CHS Related to the Spin-off

In connection with the Spin-off and as of April 29, 2016, the Company entered into certain agreements with CHS that allocated between the Company and CHS the various assets, employees, liabilities and obligations (including investments, property, employee benefits and tax-related assets and liabilities) that were previously part of CHS. In addition, these agreements govern certain relationships between, and activities of, the Company and CHS for a definitive period of time after the Spin-off, as specified by each individual agreement.

The agreements were as follows:

• Separation and Distribution Agreement. This agreement governed the principal actions of both the Company and CHS that needed to be taken in connection with the Spin-off. It also sets forth other agreements that govern certain aspects of the Company’s relationship with CHS following the Spin-off.

• Tax Matters Agreement. This agreement governs respective rights, responsibilities and obligations of the Company and CHS after the Spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local income taxes, other tax matters and related tax returns.

• Employee Matters Agreement. This agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of both the Company and CHS. It also

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allocated liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs as of the Spin-off date.

In addition to the agreements referenced above, the Company entered into certain transition services agreements and other ancillary agreements with CHS defining agreed upon services to be provided by CHS to certain or all QHC hospitals, as determined by each agreement, commencing on the Spin-off date. The agreements generally have terms of five years.

A summary of the major provisions of the transition services agreements follows:

• Shared Services Centers Transition Services Agreement. This agreement defines services to be provided by CHS related to billing and collections utilizing CHS shared services centers. Services include, but are not limited to, billing and receivables management, statement processing, denials management, cash posting, patient customer service, and credit balance and other account research. In addition, it provides for patient pre-arrival services, including pre-registration, insurance verification, scheduling and charge estimates. Fees are based on a percentage of cash collections each month.

• Computer and Data Processing Transition Services Agreement. This agreement defines services to be provided by CHS for information technology infrastructure, support and maintenance. Services include, but are not limited to, operational support for various applications, oversight, maintenance and information technology support services, such as helpdesk, product support, network monitoring, data center operations, service ticket management and vendor relations. Fees are based on both a fixed charge for labor costs, as well as direct charges for all third-party vendor contracts entered into by CHS on QHC’s behalf.

• Receivables Collection Agreement (“PASI”). This agreement defines services to be provided by CHS’ wholly-owned subsidiary, PASI, which currently serves as a third-party collection agency to QHC related to accounts receivable collections of both active and bad debt accounts of QHC hospitals, including both receivables that existed as of the Spin-off date and those that have occurred since the Spin-off date. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Billing and Collection Agreement (“PPSI”). This agreement defines services to be provided by CHS related to collections of accounts receivable generated by the Company’s affiliated outpatient healthcare facilities. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Employee Service Center Agreement. This agreement defines services to be provided by CHS related to payroll processing and human resources information systems support. Fees are based on a fixed charge per employee headcount per month.

• Eligibility Screening Services Agreement. This agreement defines services to be provided by CHS for financial and program criteria screening related to Medicaid or other program eligibility for pure self-pay patients. Fees are based on a fixed charge for each hospital receiving services.

The total expenses recorded by the Company under transition services agreements with CHS following the Spin-off combined with the allocations from CHS for these same services prior to the Spin-off were $16.0 million and $17.8 million for the three months ended June 30, 2017 and 2016, respectively, and $32.3 million and $34.1 million for the six months ended June 30, 2017 and 2016, respectively. The Company is disputing in arbitration certain charges under the transition services agreements with CHS.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is a party to various legal, regulatory and governmental proceedings incidental to its business. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental proceedings, including the matters described herein, will have a material adverse effect on the operating results, financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in these matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

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In connection with the Spin-off, CHS agreed to indemnify QHC for certain liabilities relating to outcomes or events occurring prior to the closing of the Spin-off, including (i) certain claims and proceedings known to be outstanding on or prior to the closing date of the Spin-off and (ii) certain claims, proceedings and investigations by governmental authorities or private plaintiffs related to activities occurring at or related to the Company’s healthcare facilities prior to the closing date of the Spin-off, but only to the extent, in the case of clause (ii), that such claims are covered by insurance policies maintained by CHS, including professional and general liability and workers’ compensation liability. In this regard, CHS will continue to be responsible for certain Health Management Associates, Inc. legal matters covered by its contingent value rights agreement that relate to the portion of CHS’ business now held by QHC. Notwithstanding the foregoing, CHS is not indemnifying QHC in respect of any claims or proceedings arising out of, or related to, the business operations of QHR at any time or its compliance with the Corporate Integrity Agreement (“CIA”) with the United States Department of Health and Human Services Office of the Inspector General (“OIG”). Subsequent to the Spin-off, the OIG entered into an “Assumption of CIA Liability Letter” with the Company reiterating the applicability of the CIA to certain of the Company’s hospitals, although the OIG declined to enter into a separate agreement with the Company.

With respect to all legal, regulatory and governmental proceedings, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company is unable to estimate an amount of possible loss or range of loss in some instances based on the significant uncertainties involved in, or the preliminary nature of, certain legal, regulatory and governmental matters.

Government Investigations

• Tooele, Utah – Physician Compensation. On May 5, 2016, the Company’s hospital in Tooele, Utah received a Civil Investigative Demand (“CID”) from the Office of the United States Attorney in Salt Lake City, Utah concerning allegations that the hospital and clinic corporation submitted or caused to be submitted false claims to the government for services referred by physicians with whom the hospital and clinic had inappropriate financial relationships, which allegedly violated federal law. The CID requested records and documentation concerning physician compensation. Because this matter remains at a preliminary stage, there are not sufficient facts available for the Company to assess what the outcome may be or to determine any estimate of the amount of loss or range of loss. The Company is fully cooperating with this investigation.

• Blue Island, Illinois – Patient Status. On October 9, 2015, the Company’s hospital in Blue Island, Illinois received a CID from the Office of the United States Attorney in Chicago, Illinois concerning allegations of upcoding observation and other outpatient services and improperly falsifying inpatient admission orders. The CID requested medical records and documentation concerning status change from observation to inpatient. The Company is unable to predict the outcome of this investigation. However, it is reasonably possible that the Company may incur a loss in connection with this investigation. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss given that the investigation is still ongoing. Under some circumstances, losses incurred in connection with an adverse resolution in this investigation could be material. The Company is fully cooperating with this investigation.

Commercial Litigation and Other Lawsuits

• Arbitration with Community Health Systems, Inc. On August 4, 2017, the Company received a demand for arbitration from CHS seeking payment of certain amounts the Company has withheld pursuant to several transition service agreements. The Company contends that the amounts are not payable to CHS and were not properly billed by CHS under the agreements. The matter is pending before the American Arbitration Association. CHS seeks payment of approximately $5.6 million relating to several of the transition service agreements. The Company intends to vigorously contest the charges as not payable to CHS under the transition service agreements and plans to make a counterclaim for additional elements of damages the Company believes it has suffered as a result of the transition service agreements. The matter is in a preliminary stage and the Company cannot assess the likelihood of a material adverse outcome at this time.

• Zwick Partners LP and Aparna Rao, Individually and On Behalf of All Others Similarly Situated v. Quorum Health Corporation, Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash, Thomas D. Miller and Michael J. Culotta. On September 9, 2016, a shareholder filed a purported class action in the United States District Court for the Middle District of Tennessee against the Company and certain of its officers. The Amended Complaint purports to be brought on behalf of a class consisting of all persons (other than defendants) who purchased or otherwise acquired

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securities of the Company between May 2, 2016 and August 10, 2016 and alleges that the Company and certain of its officers violated federal securities laws, including Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by making alleged false and/or misleading statements and failing to disclose certain information regarding aspects of the Company’s business, operations and compliance policies. On April 17, 2017, Plaintiff filed a Second Amended Complaint adding additional defendants, Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash. On June 23, 2017, the Company filed a motion to dismiss. The Company is vigorously defending itself in this matter. The Company is unable to predict the outcome of this matter. However, it is reasonably possible that the Company may incur a loss in connection with this matter. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss because the motion to dismiss is still pending and discovery is stayed pending resolution of the motion to dismiss. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

• United Tort Claimants v. Quorum Health Resources, LLC (U.S. Bankruptcy Court for the District of New Mexico); Douthitt-Dugger, et al. v. Quorum Health Resources, LLC (Bernalillo County, New Mexico District Court). Plaintiffs in these cases underwent surgical procedures at Gerald Champion Regional Medical Center in New Mexico that they contend were experimental and performed by an unqualified doctor. Their lawsuits, originally filed on June 11, 2010, against the doctors, QHR and the hospital are pending in state court and in federal bankruptcy court in New Mexico. Subject to an adverse result in the insurance coverage litigation referenced below, in 2012, QHR resolved plaintiffs’ claims for QHR’s liability exceeding insurance limits, and for liability not covered by insurance, for $5.1 million through a settlement agreement. Litigation of plaintiffs’ claims against QHR has continued, and the trial of the claims of most of the plaintiffs is proceeding in phases in a bankruptcy court bench trial. During the liability phase, on December 23, 2016, the federal bankruptcy court in New Mexico ruled that QHR was 16.5% at fault for plaintiffs’ injuries. On June 19, 2017, a one-day bankruptcy court bench trial was held on an issue related to the enforceability of the prior settlement agreement, and no decision has been received to date. In addition, the final phase of the trial in federal bankruptcy court, to determine plaintiffs’ damages and QHR offsets, was tried July 24 through August 7, 2017, and no decision has been received to date. The United Tort Claimants (“UTC”) have made new and yet unproven allegations during trial that they contend warrant additional liability for QHR. QHR believes that the UTC’s contentions are without merit and are vigorously defending against them. The New Mexico state court has set March 8, 2018 as the trial date for plaintiffs’ claims against QHR. QHR’s insurer, Lexington Insurance Company, is providing a defense in these cases, subject to a reservation of rights. Lexington has sued QHR in Williamson County, Tennessee seeking a declaration that plaintiffs’ claims and the cost of defending QHR are not covered by Lexington. (Lexington Insurance Company v. Quorum Health Resources, LLC, et al. (Williamson County, Tennessee Chancery Court)). No trial date has been set for Lexington’s claim against QHR to nullify insurance coverage, which QHR is also vigorously defending. The Company has sought partial summary judgment on Lexington's claim for reimbursement of defense costs incurred in the UTC actions, and no decision has been received. The Company is unable to predict the outcome of this matter. However, it is reasonably possible that the Company may incur a loss in connection with this matter. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss because the proceedings with respect to the merits of the New Mexico state court action, the availability and extent of insurance coverage and damages are not sufficientlyadvanced. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

Insurance Reserves

As part of the business of owning and operating hospitals, the Company is subject to potential professional and general liability and workers’ compensation liability claims or other legal actions alleging liability on its part. The Company is also subject to similar liabilities related to its QHR business.

Prior to the Spin-off, CHS provided professional and general liability insurance and workers’ compensation liability insurance to QHC and indemnified QHC from losses under these insurance arrangements related to its hospital operations business. The liabilities for claims related to QHC’s hospital operations business were determined based on an actuarial study of QHC’s operations and historical claims experience at its hospitals. Corresponding receivables from CHS were established to reflect the indemnification by CHS for each of these liabilities for claims that related to events and circumstances that occurred prior to the Spin-off date.

After the Spin-off, QHC entered into its own professional and general liability insurance and workers’ compensation liability insurance arrangements to mitigate the risk for claims exceeding its self-insured retention levels. The Company maintains a self-insured retention level for professional and general liability claims of $5 million per claim and maintains a $0.5 million per claim, high deductible program for workers’ compensation. Due to the differing nature of its business, the Company maintains separate

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insurance arrangements related to its subsidiary, QHR. The self-insured retention level for QHR is $6 million for professional and general liability insurance.

The following tables provide a summary of the Company’s insurance reserves related to professional and general liability claims and workers’ compensation liability claims, distinguished between those indemnified by CHS and those related to the Company’s self-insurance risks (in thousands):

	June 30, 2017
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	22,984	$	55,743	$	22,984	$	55,743
All other self-insurance reserves		—		—		1,417		24,262
Total insurance reserves for professional and general liability		22,984		55,743		24,401		80,005
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		3,498		16,808		3,498		16,808
All other self-insurance reserves		—		—		1,735		3,356
Total insurance reserves for workers' compensation liability		3,498		16,808		5,233		20,164
Total self-insurance reserves	$	26,482	$	72,551	$	29,634	$	100,169
	December 31, 2016
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	17,580	$	59,652	$	17,580	$	59,652
All other self-insurance reserves		—		—		230		14,542
Total insurance reserves for professional and general liability		17,580		59,652		17,810		74,194
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		4,863		15,958		4,863		15,958
All other self-insurance reserves		—		—		1,736		1,458
Total insurance reserves for workers' compensation liability		4,863		15,958		6,599		17,416
Total self-insurance reserves	$	22,443	$	75,610	$	24,409	$	91,610

The receivables from CHS are included in other current assets and other long-term assets on the consolidated and combined balance sheets. The liability for the current portion of professional and general liability claims is included in other current liabilities, and the liability for the current portion of workers’ compensation liability claims is included in accrued salaries and benefits. The long-term portions of both claims liabilities are included in other long-term liabilities.

Physician Recruiting Commitments

As part of its physician recruitment strategy, the Company provides income guarantee agreements to certain physicians who agree to relocate to its communities and commit to remain in practice there. Under such agreements, the Company is required to make payments to a physician in excess of the amount earned in his or her practice, up to the amount of the income guarantee. The income guarantee period over which the Company agrees to subsidize a physician’s income is typically one year and the commitment period over which the physician agrees to practice in the designated community is typically three years. Under the terms of the agreements, such payments are recoverable by the Company from physicians who do not fulfill their commitment periods. The Company’s recorded liabilities related to these income guarantee agreements were $1.1 million and $1.6 million at June 30, 2017 and December 31, 2016, respectively, which are included in other current liabilities on the consolidated and combined balance sheets. At June 30, 2017, the maximum potential amount of future payments under these guarantees in excess of the liabilities recorded was $1.5 million.

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QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Construction and Capital Commitments

The Company is building a new patient tower and expanding surgical capacity at McKenzie – Willamette Medical Center, its hospital in Springfield, Oregon. During the three months ended June 30, 2017 and 2016, the Company incurred costs of $12.8 million and $10.3 million, respectively, and incurred costs of $24.5 million and $17.2 million during the six months ended June 30, 2017 and 2016, respectively, related to this project. As of June 30, 2017, the Company had incurred a total of $73.4 million of costs for this project. The total estimated cost of this project, including equipment costs, is estimated to be approximately $105.0 million. The project is expected to be completed in late 2018.

NOTE 18 - SUBSEQUENT EVENTS

In July 2017, the Company used the proceeds from the sale of Trinity to pay down $4.2 million of additional principal on the Term Loan Facility and $10.4 million of principal on the ABL Credit Facility.

NOTE 19 - GUARANTOR AND NON-GUARANTOR SUPPLEMENTAL INFORMATION

The Senior Notes are senior unsecured obligations of the Company guaranteed on a senior basis by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries (the “Guarantors”). The Senior 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 when a sale of all of the subsidiary guarantor’s assets used in operations occurs.

These condensed consolidating and combining 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 the accompanying condensed consolidated and combined financial statements of the Company, except as follows:

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

• Due to Parent and Due from Parent are presented gross in the supplemental condensed consolidating and combining balance sheets.

• Investments in consolidated subsidiaries, as well as guarantor subsidiaries’ investments in non-guarantor subsidiaries, are presented under the equity method of accounting with the related investments presented within the line items net investment in subsidiaries and other long-term liabilities in the supplemental condensed consolidating and combining balance sheets.

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

Following the Spin-off, the Company’s intercompany activity consists primarily of daily cash transfers, the allocation of certain expenses and expenditures paid by the parent issuer on behalf of its subsidiaries, and the push down of investment in its subsidiaries. The parent issuer’s investment in its subsidiaries reflects the activity of the period beginning April 29, 2016 through June 30, 2017. Likewise, the parent issuer’s equity in earnings of unconsolidated affiliates represents the Company’s earnings for the same post-spin period.

Prior to the Spin-off, the Company’s intercompany activity consisted primarily of cash transfers and the allocation of certain expenses among the various subsidiaries, as well as the pushdown of the Guarantors’ investment in the subsidiary non-guarantors. Due to and due from Parent activity consist of the allocation of certain expenses and expenditures paid by CHS on behalf of QHC entities.

The Company’s subsidiaries generally do not purchase services from one another; thus, the intercompany and due to and due from parent activity do not represent revenue generating transactions. Intercompany transactions eliminate in consolidation.

42

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	455,874		$	129,341		$	—		$	585,215
Provision for bad debts		—			48,050			7,019			—			55,069
Net operating revenues		—			407,824			122,322			—			530,146
Operating costs and expenses:
Salaries and benefits		—			182,437			82,872			—			265,309
Supplies		—			45,403			18,709			—			64,112
Other operating expenses		2,892			124,634			30,087			—			157,613
Depreciation and amortization		—			17,591			2,995			—			20,586
Rent		—			7,064			5,088			—			12,152
Electronic health records incentives earned		—			(1,981	)		204			—			(1,777	)
Legal, professional and settlement costs		—			3,934			—			—			3,934
Impairment of long-lived assets and goodwill		—			12,900			—			—			12,900
Loss (gain) on sale of hospitals, net		—			—			(4,321	)		—			(4,321	)
Transaction costs related to the Spin-off		—			—			—			—			—
Total operating costs and expenses		2,892			391,982			135,634			—			530,508
Income (loss) from operations		(2,892	)		15,842			(13,312	)		—			(362	)
Interest expense, net		31,349			(970	)		79			—			30,458
Equity in earnings of affiliates		(3,344	)		2,554			—			790			—
Income (loss) before income taxes		(30,897	)		14,258			(13,391	)		(790	)		(30,820	)
Provision for (benefit from) income taxes		(267	)		(140	)		162			—			(245	)
Net income (loss)		(30,630	)		14,398			(13,553	)		(790	)		(30,575	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			55			—			55
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	14,398		$	(13,608	)	$	(790	)	$	(30,630	)

43

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	446,968		$	151,195		$	—		$	598,163
Provision for bad debts		—			51,551			16,875			—			68,426
Net operating revenues		—			395,417			134,320			—			529,737
Operating costs and expenses:
Salaries and benefits		—			178,375			86,511			—			264,886
Supplies		—			44,788			19,348			—			64,136
Other operating expenses		—			126,539			36,646			—			163,185
Depreciation and amortization		—			25,774			5,689			—			31,463
Rent		—			6,870			5,675			—			12,545
Electronic health records incentives earned		—			(3,995	)		(252	)		—			(4,247	)
Legal, professional and settlement costs		—			5,447			—			—			5,447
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			857			320			—			1,177
Total operating costs and expenses		—			598,255			190,737			—			788,992
Income (loss) from operations		—			(202,838	)		(56,417	)		—			(259,255	)
Interest expense, net		20,641			7,960			675			—			29,276
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(212,558	)		(57,092	)		218,811			(288,531	)
Provision for (benefit from) income taxes		(2,740	)		(33,952	)		(7,873	)		—			(44,565	)
Net income (loss)		(234,952	)		(178,606	)		(49,219	)		218,811			(243,966	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,095			—			1,095
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(178,606	)	$	(50,314	)	$	218,811		$	(245,061	)

44

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	904,874		$	268,286		$	—		$	1,173,160
Provision for bad debts		—			97,609			17,765			—			115,374
Net operating revenues		—			807,265			250,521			—			1,057,786
Operating costs and expenses:
Salaries and benefits		—			363,459			166,452			—			529,911
Supplies		—			91,276			36,658			—			127,934
Other operating expenses		2,892			253,944			64,201			—			321,037
Depreciation and amortization		—			36,119			6,587			—			42,706
Rent		—			14,162			10,092			—			24,254
Electronic health records incentives earned		—			(3,438	)		(791	)		—			(4,229	)
Legal, professional and settlement costs		—			4,469			—			—			4,469
Impairment of long-lived assets and goodwill		—			16,200			—			—			16,200
Loss (gain) on sale of hospitals, net		—			—			(5,191	)		—			(5,191	)
Transaction costs related to the Spin-off		—			23			8			—			31
Total operating costs and expenses		2,892			776,214			278,016			—			1,057,122
Income (loss) from operations		(2,892	)		31,051			(27,495	)		—			664
Interest expense, net		59,933			(2,026	)		81			—			57,988
Equity in earnings of affiliates		(5,091	)		5,132			—			(41	)		—
Income (loss) before income taxes		(57,734	)		27,945			(27,576	)		41			(57,324	)
Provision for (benefit from) income taxes		457			222			(223	)		—			456
Net income (loss)		(58,191	)		27,723			(27,353	)		41			(57,780	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			411			—			411
Net income (loss) attributable to Quorum Health Corporation	$	(58,191	)	$	27,723		$	(27,764	)	$	41		$	(58,191	)

45

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	906,715		$	305,932		$	—		$	1,212,647
Provision for bad debts		—			99,906			33,453			—			133,359
Net operating revenues		—			806,809			272,479			—			1,079,288
Operating costs and expenses:
Salaries and benefits		—			350,577			171,171			—			521,748
Supplies		—			89,569			38,228			—			127,797
Other operating expenses		—			257,998			69,650			—			327,648
Depreciation and amortization		—			51,264			11,356			—			62,620
Rent		—			13,891			11,203			—			25,094
Electronic health records incentives earned		—			(7,994	)		(461	)		—			(8,455	)
Legal, professional and settlement costs		—			5,688			—			—			5,688
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			3,655			1,257			—			4,912
Total operating costs and expenses		—			978,248			339,204			—			1,317,452
Income (loss) from operations		—			(171,439	)		(66,725	)		—			(238,164	)
Interest expense, net		20,641			33,500			2,587			—			56,728
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(206,699	)		(69,312	)		218,811			(294,892	)
Provision for (benefit from) income taxes		(2,740	)		(32,410	)		(11,089	)		—			(46,239	)
Net income (loss)		(234,952	)		(174,289	)		(58,223	)		218,811			(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,410			—			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(174,289	)	$	(59,633	)	$	218,811		$	(250,063	)

46

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(30,630	)	$	14,398	$	(13,553	)	$	(790	)	$	(30,575	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		120			120		—			(120	)		120
Comprehensive income (loss)		(30,510	)		14,518		(13,553	)		(910	)		(30,455	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		55			—			55
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(30,510	)	$	14,518	$	(13,608	)	$	(910	)	$	(30,510	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(178,606	)	$	(49,219	)	$	218,811	$	(243,966	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(182,416	)		(49,219	)		222,621		(247,776	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,095			—		1,095
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(182,416	)	$	(50,314	)	$	222,621	$	(248,871	)

47

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(58,191	)	$	27,723	$	(27,353	)	$	41		$	(57,780	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		242			242		—			(242	)		242
Comprehensive income (loss)		(57,949	)		27,965		(27,353	)		(201	)		(57,538	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		411			—			411
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(57,949	)	$	27,965	$	(27,764	)	$	(201	)	$	(57,949	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(174,289	)	$	(58,223	)	$	218,811	$	(248,653	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(178,099	)		(58,223	)		222,621		(252,463	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,410			—		1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(178,099	)	$	(59,633	)	$	222,621	$	(253,873	)

48

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Balance Sheet

June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	15,030		$	7,001		$	374		$	—		$	22,405
Patient accounts receivable, net of allowance for doubtful accounts		—			322,135			87,082			—			409,217
Inventories		—			44,616			9,653			—			54,269
Prepaid expenses		100			21,733			5,808			—			27,641
Due from third-party payors		—			92,387			4,785			—			97,172
Current assets of hospitals held for sale		—			5,813			—			—			5,813
Other current assets		—			33,562			14,767			—			48,329
Total current assets		15,130			527,247			122,469			—			664,846
Intercompany receivable		3			217,985			171,744			(389,732	)		—
Property and equipment, net		—			584,791			126,687			—			711,478
Goodwill		—			244,192			165,589			—			409,781
Intangible assets, net		—			69,616			8,078			—			77,694
Long-term assets of hospitals held for sale		—			14,365			16			—			14,381
Other long-term assets		—			86,889			22,432			—			109,321
Net investment in subsidiaries		1,495,140			—			—			(1,495,140	)		—
Total assets	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	1,395		$	254		$	—		$	1,649
Accounts payable		46			148,826			21,990			—			170,862
Accrued liabilities:
Accrued salaries and benefits		—			68,200			26,181			—			94,381
Accrued interest		10,142			—			—			—			10,142
Due to third-party payors		—			37,584			1,297			—			38,881
Current liabilities of hospitals held for sale		—			1,391			—			—			1,391
Other current liabilities		340			33,934			12,889			—			47,163
Total current liabilities		10,528			291,330			62,611			—			364,469
Long-term debt		1,260,089			24,301			331			—			1,284,721
Intercompany payable		60,885			172,970			155,877			(389,732	)		—
Deferred income tax liabilities, net		31,729			—			—			—			31,729
Other long-term liabilities		—			175,295			30,198			(63,737	)		141,756
Total liabilities		1,363,231			663,896			249,017			(453,469	)		1,822,675
Redeemable noncontrolling interests		—			—			5,614			—			5,614
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		541,774			1,290,232			460,414			(1,750,646	)		541,774
Accumulated other comprehensive income (loss)		(2,518	)		(2,518	)		—			2,518			(2,518	)
Accumulated deficit		(392,217	)		(206,525	)		(110,200	)		316,725			(392,217	)
Total Quorum Health Corporation stockholders' equity		147,042			1,081,189			350,214			(1,431,403	)		147,042
Nonredeemable noncontrolling interests		—			—			12,170			—			12,170
Total equity		147,042			1,081,189			362,384			(1,431,403	)		159,212
Total liabilities and equity	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501

49

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Balance Sheet

December 31, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	21,609		$	3,498		$	348		$	—		$	25,455
Patient accounts receivable, net of allowance for doubtful accounts		—			277,155			103,530			—			380,685
Inventories		—			46,318			11,806			—			58,124
Prepaid expenses		—			17,874			5,154			—			23,028
Due from third-party payors		—			109,793			6,442			—			116,235
Current assets of hospitals held for sale		—			1,502			—			—			1,502
Other current assets		—			41,673			16,269			—			57,942
Total current assets		21,609			497,813			143,549			—			662,971
Intercompany receivable		3			126,035			84,827			(210,865	)		—
Property and equipment, net		—			624,457			109,443			—			733,900
Goodwill		—			252,433			164,400			—			416,833
Intangible assets, net		—			73,404			11,578			—			84,982
Long-term assets of hospitals held for sale		—			6,851			—			—			6,851
Other long-term assets		—			72,967			15,866			—			88,833
Net investment in subsidiaries		1,485,213			—			—			(1,485,213	)		—
Total assets	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	3,819		$	1,560		$	304		$	—		$	5,683
Accounts payable		158			147,521			22,005			—			169,684
Accrued liabilities:
Accrued salaries and benefits		—			69,896			28,907			—			98,803
Accrued interest		19,915			—			—			—			19,915
Due to third-party payors		—			40,595			1,942			—			42,537
Current liabilities of hospitals held for sale		—			492			—			—			492
Other current liabilities		—			46,002			7,266			—			53,268
Total current liabilities		23,892			306,066			60,424			-			390,382
Long-term debt		1,215,836			24,899			407			-			1,241,142
Intercompany payable		34,495			86,084			90,286			(210,865	)		—
Deferred income tax liabilities, net		31,474			—			—			—			31,474
Other long-term liabilities		—			144,950			22,651			(58,605	)		108,996
Total liabilities		1,305,697			561,999			173,768			(269,470	)		1,771,994
Redeemable noncontrolling interests		—			—			6,807			—			6,807
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		537,911			1,333,347			412,705			(1,746,052	)		537,911
Accumulated other comprehensive income (loss)		(2,760	)		(2,760	)		-			2,760			(2,760	)
Accumulated deficit		(334,026	)		(238,626	)		(78,058	)		316,684			(334,026	)
Total Quorum Health Corporation stockholders' equity		201,128			1,091,961			334,647			(1,426,608	)		201,128
Nonredeemable noncontrolling interests		—			—			14,441			—			14,441
Total equity		201,128			1,091,961			349,088			(1,426,608	)		215,569
Total liabilities and equity	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370

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QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(68,468	)	$	52,472		$	7,041		$	—		$	(8,955	)
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(13,390	)		(25,752	)		—			(39,142	)
Capital expenditures for software		—			(2,670	)		(499	)		—			(3,169	)
Acqusitions, net of cash acquired		—			(20	)		(1,867	)		—			(1,887	)
Proceeds from the sale of hospitals		—			—			20,156			—			20,156
Changes in intercompany balances with affiliates, net		—			(30,637	)		—			30,637			—
Net cash provided by (used in) investing activities		—			(46,717	)		(7,962	)		30,637			(24,042	)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net		50,000			—			—			—			50,000
Borrowings of long-term debt		—			72			—			—			72
Repayments of long-term debt		(10,832	)		(835	)		(180	)		—			(11,847	)
Payments of debt issuance costs		(2,938	)		—			—			—			(2,938	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			(1,489	)		—			—			(1,489	)
Cash distributions to noncontrolling investors		—			—			(3,851	)		—			(3,851	)
Changes in intercompany balances with affiliates, net		25,659			—			4,978			(30,637	)		—
Net cash provided by (used in) financing activities		61,889			(2,252	)		947			(30,637	)		29,947
Net change in cash and cash equivalents		(6,579	)		3,503			26			—			(3,050	)
Cash and cash equivalents at beginning of period		21,609			3,498			348			—			25,455
Cash and cash equivalents at end of period	$	15,030		$	7,001		$	374		$	—		$	22,405

51

QUORUM HEALTH CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(Continued)

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(3,759	)	$	87,812		$	(22,860	)	$	—		$	61,193
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(29,216	)		(3,991	)		—			(33,207	)
Capital expenditures for software		—			(2,426	)		(1,378	)		—			(3,804	)
Other investing activities		—			2,509			(1,107	)		—			1,402
Changes in intercompany balances with affiliates, net		—			(82,211	)		—			82,211			—
Net cash provided by (used in) investing activities		—			(111,344	)		(6,476	)		82,211			(35,609	)
Cash flows from financing activities:
Borrowings of long-term debt		1,255,464			56			—			—			1,255,520
Repayments of long-term debt		(2,200	)		(1,777	)		(300	)		—			(4,277	)
Increase (decrease) in Due to Parent, net		—			25,183			—			—			25,183
Payments of debt issuance costs		(28,003	)		—			—			—			(28,003	)
Cash paid to Parent related to the Spin-off		(1,217,336	)		—			—			—			(1,217,336	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			27			—			—			27
Cash distributions to noncontrolling investors		—			—			(2,647	)		—			(2,647	)
Purchases of shares from noncontrolling investors		—			—			(12	)		—			(12	)
Changes in intercompany balances with affiliates, net		47,996			—			34,215			(82,211	)		—
Net cash provided by (used in) financing activities		55,921			23,489			31,256			(82,211	)		28,455
Net change in cash and cash equivalents		52,162			(43	)		1,920			—			54,039
Cash and cash equivalents at beginning of period		—			524			582			—			1,106
Cash and cash equivalents at end of period	$	52,162		$	481		$	2,502		$	—		$	55,145

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition, results of operations and cash flows, together with the unaudited condensed consolidated and combined financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q, as well as the audited consolidated and combined financials statements and accompanying notes, and additionally the sections entitled “Business” and “Risk Factors,” included in our Annual Report on Form 10-K (the “2016 Annual Report on Form 10-K”). The financial information discussed below and included in our 2016 Annual Report on Form 10-K may not necessarily reflect what our results of operations, financial position and cash flows would have been had we been a stand-alone company for the entirety of the periods presented herein or what our results of operations, financial position and cash flows may be in the future. Except as otherwise indicated or unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “QHC” and the “Company” refer to the consolidated and combined business operations of the hospitals and Quorum Health Resources, LLC (“QHR”) that CHS spun off to Quorum Health Corporation on April 29, 2016. Additionally, all references to “CHS” and “Parent” refer to Community Health Systems, Inc. and its consolidated subsidiaries. References to our financial statements and financial outlook are on a consolidated and combined basis unless otherwise noted.

Forward Looking Statements

Some of the matters discussed in this Quarterly Report on Form 10-Q include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “thinks,” and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements.

These factors include, but are not limited to, the following:

• general economic and business conditions, both nationally and in the regions in which we operate;

• risks associated with our substantial indebtedness, leverage and debt service obligations, including our ability to comply with our debt covenants, including our senior credit facility, as amended;

• the ability to achieve operating and financial targets and to control the costs of providing services if patient volumes are lower than expected;

• the ability to achieve the anticipated benefits of the Spin-off;

• the impact of significant changes to the Affordable Care Act, its implementation or its interpretation, efforts to repeal the Affordable Care Act, as well as changes in other federal, state or local laws or regulations affecting the healthcare industry;

• the success and long-term viability of healthcare insurance exchanges, which may be impacted by whether a sufficient number of payors participate, as well as the impact of the 2016 federal elections on the Affordable Care Act;

• the extent to which states support or implement changes to Medicaid programs, utilize healthcare insurance exchanges or alter the provision of healthcare to state residents through regulation or otherwise;

• the extent to which regulatory and economic changes occur in Illinois, where a material portion of our revenues are concentrated;

• demographic changes;

• the failure to comply with governmental regulations;

• the impact of certain outsourcing functions, and the ability of CHS, as provider of our billing and collection services pursuant to the transition services agreements, to timely and appropriately bill and collect;

• the potential adverse impact of known and unknown government investigations, internal investigations, investor demands for investigation, audits, and federal and state false claims act litigation and other legal proceedings, including the shareholder litigation against our company and certain of our officers and threats of litigation, as well as the significant costs and attention from management required to address such matters;

• our ability, where appropriate, to enter into, maintain and comply with provider arrangements with payors and the terms of these arrangements, which may be further impacted by the increasing consolidation of health insurers and managed care companies;

• changes in reimbursement rates paid by federal or state healthcare programs, including Medicare and Medicaid, or commercial payors, and the timeliness of reimbursement payments;

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• any potential impairments in the carrying values of long-lived assets and goodwill or the shortening of the useful lives of long-lived assets;

• the effects related to the continued implementation of the sequestration spending reductions and the potential for future deficit reduction legislation;

• increases in the amount and risk of collectability of patient accounts receivable, including lower collectability levels which may result from, among other things, self-pay growth in states that have not expanded Medicaid and difficulties in collecting payments for which patients are responsible, including co-pays and deductibles;

• the efforts of healthcare insurers, providers and others to contain healthcare costs, including the trend toward treatment of patients in less acute or specialty healthcare settings and the increased emphasis on value-based purchasing;

• our ongoing ability to demonstrate meaningful use of certified EHR technology and recognize income for the related Medicare or Medicaid incentive payments, to the extent such payments have not expired;

• increases in wages as a result of inflation or competition for highly technical positions and rising medical supply and drug costs due to market pressure from pharmaceutical companies and new product releases;

• liabilities and other claims asserted against us, including self-insured malpractice claims;

• competition;

• our ability to attract and retain, at reasonable employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers;

• changes in medical or other technology;

• changes in U.S. generally accepted accounting principles, including the impacts of adopting newly issued accounting standards;

• the availability and terms of capital to fund acquisitions, replacement facilities or other capital expenditures;

• our ability to successfully make acquisitions or complete divestitures and the timing thereof, our ability to complete any such acquisitions or divestitures on desired terms or at all, and our ability to realize the intended benefits from any such acquisitions or divestitures;

• the impact of seasonal or severe weather conditions or earthquakes;

• our ability to obtain adequate levels of professional and general liability and workers’ compensation liability insurance;

• the effects related to outbreaks of infectious diseases;

• the impact of external, criminal cyber-attacks or security breaches;

• our ability to manage effectively our arrangements with third-party vendors for key non-clinical business functions and services;

• our ability to maintain certain accreditations at our existing facilities and any future facilities we may acquire; and

• the risk factors included in our other filings with the SEC and included in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any.

Although we believe that these forward-looking statements are based upon reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond our control. Accordingly, we cannot give any assurance that our expectations will in fact occur and caution that actual results may differ materially from those in the forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

As of June 30, 2017, we owned or leased a diversified portfolio of 34 hospitals in rural and mid-sized markets, which are located in 16 states and have a total of 3,168 licensed beds. Our hospitals provide a broad range of hospital and outpatient healthcare services, including general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic services, psychiatric and rehabilitation services. For our hospital operations business,, we are paid for our services by

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governmental agencies, private insurers and directly by the patients we serve. We also operate QHR, a leading hospital management advisory and healthcare consulting services business. For our management advisory and consulting services business, we are paid by the non-affiliated hospitals utilizing our services. Over 95% of our net operating revenues are attributable to our hospital operations business.

Business Strategy Summary

Our business strategy is focused on the following key objectives:

• refine our portfolio to include high-quality, profitable hospitals and outpatient service facilities;

• expand the breadth and capacity of the specialty care service lines and outpatient services we offer;

• enhance patient safety, quality of care and satisfaction at our healthcare facilities;

• improve the operating and financial performance of our hospital operations business;

• improve our financial results by pursuing the sale of underperforming hospitals; and

• grow our revenues through selective acquisitions.

Our business strategy includes an ongoing strategic review of our hospitals based upon analysis of financial performance, current competitive conditions, expected demographic trends, joint venture opportunities and capital allocation requirements. As part of this strategy, we are actively engaging in initiatives, among others, to divest underperforming hospitals, reduce our debt and refine our portfolio to a more sustainable group of hospitals with higher operating margins. In December 2016, we sold Barrow Regional Medical Centers (“Barrow”) for proceeds of $6.6 million and Sandhills Regional Medical Center (“Sandhills”) for proceeds of $7.2 million. In March 2017, we sold Cherokee Medical Center (“Cherokee”) for proceeds of $4.3 million and in June 2017, we sold Trinity Hospital of Augusta (“Trinity”) for proceeds of $15.9 million. In the first quarter of 2017, we targeted an additional ten hospitals that we intend to divest within twelve to fifteen months. These ten potential divestiture hospitals had net operating losses of $9.3 million and $13.1 million for the three months ended June 30, 2017 and 2016, respectively, and $22.5 million and $25.3 million for the six months ended June 30, 2017 and 2016, respectively.

We refer to the four hospitals that we have divested since the Spin-off as the Divestitures Group, the ten hospitals targeted for divestiture as the Potential Divestitures Group and the remaining twenty-four hospitals that we operate as the Continuing Hospitals Group. We believe that a discussion of our operating results that distinguishes between those hospitals that management does not foresee as being part of our ongoing hospital operations business and those hospitals that will become our core hospital business, and available to service our debt obligations into the future, is meaningful to our stockholders, investors and other users of our financial statements. See “— Overview — Recent Divestiture Activity” below for additional information on our divestitures. These hospital groups are also further defined in “— Results of Operations” below.

Included in the Potential Divestitures Group are four hospitals in which we have a definitive agreement to sell. These agreements cover 70-bed Sunbury Community Hospital located in Sunbury Pennsylvania, 47-bed Lock Haven Hospital, located in Lock Haven, Pennsylvania, 45-bed McKenzie Regional Hospital, located in McKenzie, Tennessee, and 45-bed Henderson County Community Hospital, located in Lexington, Tennessee. The definitive agreements cover the hospitals and their affiliated outpatient facilities. We currently anticipate completing the sale of these hospitals in the third quarter of 2017. See Note 2 – Basis of Presentation and Significant Accounting Policies – Assets and Liabilities of Hospitals Held for Sale in the accompanying financial statements for additional information on how hospitals meet the criteria for classification as held for sale.

Financial Overview

Our net operating revenues for the three months ended June 30, 2017 increased $0.4 million to $530.1 million, compared to $529.7 million for the three months ended June 30, 2016, a 0.1% increase. Net operating revenues for the quarter were negatively impacted by a decrease of $18.2 million from the four hospitals divested in December 2016 and in the first half of 2017, and a decrease of $11.3 million resulting from our inability to accrue in the 2017 period for the California HQAF program revenues pending approval for the 2017 to 2019 program period by Centers for Medicare & Medicaid Services (“CMS”). Excluding these amounts, net operating revenues increased $29.9 million for the three months ended June 30, 2017 compared to the same period in 2016, primarily due to favorable volume and rate variances and a decrease in the provision for bad debts. Net loss attributable to Quorum Health Corporation for the three months ended June 30, 2017 was $(30.6) million compared to $(245.1) million for the same period in 2016. The net loss for the three months ended June 30, 2017 was impacted by an $8.6 million decrease, net of provider taxes, related to the California HQAF program and $12.9 million of impairment charges related to the ten hospitals held for sale or identified for potential divestiture. Our 2016 results for the same period included $250.4 million of impairment charges. On a same-facility basis, our operating results for the three months ended June 30, 2017 reflect a 1.5% decrease in admissions and a 0.2% decrease in adjusted admissions compared to the same period in 2016. Excluding the four divested hospitals and ten hospitals intended for divestiture, admissions and adjusted admissions increased 1.5% and 2.6%, respectively, for these same periods.

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Our net operating revenues for the six months ended June 30, 2017 decreased $21.5 million to $1,057.8 million, compared to $1,079.3 million for the six months ended June 30, 2016, a 2.0% decrease. Net operating revenues decreased $31.5 million related to the divested hospitals and decreased $22.3 million due to the inability to accrue revenues related to the California HQAF program, as discussed above. Excluding these amounts, net operating revenues of the remaining hospitals increased $32.3 million for the six months ended June 30, 2017 compared to the same period in 2016, primarily due to favorable volume and rate variances and a decrease in the provision for bad debts. Net loss attributable to Quorum Health Corporation for the six months ended June 30, 2017 was $(58.2) million compared to $(250.1) million for the same period in 2016. The 2017 period included impairment charges of $16.2 million related to hospitals held for sale or identified for divestiture and a net gain of $5.2 million on the sale of hospitals. The 2016 period included $250.4 million of impairment charges mentioned above, $16.9 million in revenues, net of provider taxes, related to the California HQAF program and $4.9 million of transaction costs related to the Spin-off. On a same-facility basis, our operating results for the six months ended June 30, 2017 reflect a 1.8% decrease in admissions and a 0.5% decrease in adjusted admissions compared to the same period in 2016. Excluding divested hospitals and hospitals intended for divestiture, admissions and adjusted admissions increased 0.4% and 1.4%, respectively, for these same periods.

The Spin-off

On April 29, 2016, CHS completed the spin-off of 38 hospitals, including their affiliated outpatient facilities, and QHR to form Quorum Health Corporation (the “Spin-off”) through the distribution of 100% of QHC common stock to CHS stockholders of record on April 22, 2016 (the “Record Date”). Each CHS stockholder received a distribution of one share of QHC common stock for every four shares of CHS common stock held as of the Record Date, plus cash in lieu of fractional shares. Our common stock began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “QHC” on May 2, 2016.

In connection with the Spin-off, we issued $400 million in aggregate principal amount of 11.625% Senior Notes due 2023 (the “Senior Notes”) on April 22, 2016 and entered into a credit agreement on April 29, 2016, consisting of an $880 million senior secured term loan facility (the “Term Loan Facility”) and a $100 million senior secured revolving credit facility (the “Revolving Credit Facility”), or on a combined basis referred to as the “Senior Credit Facility.” In addition, we entered into a $125 million senior secured asset-based revolving credit facility. The net offering proceeds of the Senior Notes, together with the net borrowings under the Term Loan Facility, were used to make a $1.2 billion payment from QHC to CHS and to pay our transaction and financing fees and expenses.

In connection with the Spin-off, we entered into certain agreements with CHS that governed or continue to govern matters related to the Spin-off. These agreements include, among others, a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement. We also entered into various transition services agreements with CHS that define agreed upon services to be provided by CHS to QHC. The transition services agreements have five year terms and include, among others, the provision for services related to information technology, payroll processing, certain human resources functions, patient eligibility screening, billing, collections and other revenue management services.

Pursuant to the terms of the Separation and Distribution Agreement, CHS made a non-cash capital contribution of $530.6 million and transferred $13.5 million of cash to us on the Spin-off date. The cash transfer consisted of an agreed upon $20.0 million for the initial funding of our working capital, reduced by $6.5 million for the difference in estimated and actual financing fees and expenses incurred at the closing of the Spin-off.

The following table contains a summary of the major transactions to effect the Spin-off of QHC as a newly formed, independent company (dollars in thousands):

											Additional
	Long-Term			Due to			Common Stock				Paid-in			Parent's
	Debt			Parent, Net			Shares		Amount		Capital			Equity
Balance at April 29, 2016 (prior to the Spin-off)	$	24,179		$	1,813,836			—	$	—	$	—		$	3,137
Borrowings of long-term debt, net of debt issuance discounts		1,255,464			—			—		—		—			—
Payments of debt issuance costs		(29,146	)		—			—		—		—			—
Cash proceeds paid to Parent		—			(1,217,336	)		—		—		—			—
Transfer of liabilities from Parent		—			(22,292	)		—		—		—			—
Net deferred income tax liability resulting from the Spin-off		—			(46,783	)		—		—		—			—
Non-cash capital contribution from Parent		—			(527,425	)		—		—		530,562			(3,137	)
Distribution of common stock		—			—			27,719,645		3		(3	)		—
Distribution of restricted stock awards		—			—			692,409		—		—			—
Balance at April 29, 2016 (after the Spin-off)	$	1,250,497		$	—			28,412,054	$	3	$	530,559		$	—

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Agreements with CHS Related to the Spin-off

In connection with the Spin-off and effective as of the Spin-off date, we entered into certain agreements with CHS that at the time of Spin-off governed the allocation to us of various assets, employees, liabilities and obligations (including investments, property, employee benefits and tax-related assets and liabilities) that were previously part of CHS. In addition, these agreements govern certain relationships and activities between QHC and CHS for a definitive period of time after the Spin-off date, as specified by each individual agreement.

A summary of these agreements follows:

• Separation and Distribution Agreement. This agreement governed the principal actions of both QHC and CHS that needed to be taken to effect the Spin-off. It sets forth other agreements that govern certain aspects of our relationship with CHS following the Spin-off.

• Tax Matters Agreement. This agreement governs respective rights, responsibilities and obligations of QHC and CHS after the Spin-off with respect to deferred tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local income taxes, other tax matters and related tax returns.

• Employee Matters Agreement. This agreement governs certain compensation and employee benefit obligations with respect to the employees and non-employee directors of QHC and CHS. It also allocated liabilities and responsibilities relating to employment matters, employee compensation, employee benefit plans and other related matters as of the Spin-off date.

In addition to the agreements referenced above, we entered into certain transition services agreements and other ancillary agreements with CHS defining agreed upon services, as specified by each agreement, to be provided by CHS to us commencing on the Spin-off date. The agreements generally have terms of five years.

A summary of the major transition services agreements follows:

• Shared Services Centers Transition Services Agreement. This agreement defines services to be provided by CHS related to billing and collections utilizing CHS shared services centers. Services include, but are not limited to, billing and receivables management, statement processing, denials management, cash posting, patient customer service, and credit balance and other account research. In addition, it provides for patient pre-arrival services, including pre-registration, insurance verification, scheduling and charge estimates. Fees are based on a percentage of cash collections each month.

• Computer and Data Processing Transition Services Agreement. This agreement defines services to be provided by CHS for information technology infrastructure, support and maintenance. Services include, but are not limited to, operational support for various applications, oversight, maintenance and information technology support services, such as helpdesk, product support, network monitoring, data center operations, service ticket management and vendor relations. Fees are based on both a fixed charge for labor costs, as well as direct charges for all third-party vendor contracts entered into by CHS on QHC’s behalf.

• Receivables Collection Agreement. This agreement defines services to be provided by CHS’ wholly-owned subsidiary, PASI, which currently serves as a third-party collection agency to us related to accounts receivable collections of both active and bad debt accounts of QHC hospitals, including both receivables that existed as of the Spin-off date and those that have occurred during the operating period since the Spin-off date. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Billing and Collection Agreement. This agreement defines services to be provided by CHS related to collections of certain accounts receivable generated from our outpatient healthcare services. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Employee Service Center Agreement. This agreement defines services to be provided by CHS related to payroll processing and human resources information systems support. Fees are based on a fixed charge per employee headcount per month.

• Eligibility Screening Services Agreement. This agreement defines services to be provided by CHS for financial and program criteria screening related to Medicaid or other program eligibility for pure self-pay patients. Fees are based on a fixed charge for each hospital receiving services

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We recorded total expenses under transition services agreements with CHS following the Spin-off combined with the allocations from CHS for these same services prior to the Spin-off were $16.0 million and $17.8 million for the three months ended June 30, 2017 and 2016, respectively, and $32.3 million and $34.1 million for the six months ended June 30, 2017 and 2016, respectively.

We are currently engaged in preliminary discussions with CHS related to the transition of certain of our transition services agreements related to billing and collections and eligibility screening services. We are seeking to bring these services in-house; however, we are unable to provide any assurances as to the timing of such an agreement or whether such agreement will be reached. We are also disputing in arbitration certain charges under the transition services agreements with CHS.

Recent Divestiture Activity

On June 30, 2017, we sold 231-bed Trinity Hospital of Augusta and its affiliated outpatient facilities, located in Augusta, Georgia, for $15.9 million. For the three months ended June 30, 2017 and 2016, our operating results included pre-tax losses of $5.0 million and $3.6 million, respectively, related to Trinity, and pre-tax losses of $7.4 million and $5.9 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, we recorded a $5.0 million gain on the sale in the three months ended June 30, 2017.

On June 7, 2017, we announced that we had entered into a definitive agreement to sell 70-bed Sunbury Community Hospital, located in Sunbury Pennsylvania, and 47-bed Lock Haven Hospital, located in Lock Haven, Pennsylvania. The definitive agreement covers both hospitals and their affiliated outpatient facilities. We currently anticipate completing the sale of these hospitals in the third quarter of 2017.

On May 12, 2017, we announced that we had entered into a definitive agreement to sell 45-bed McKenzie Regional Hospital, located in McKenzie, Tennessee, and 45-bed Henderson County Community Hospital, located in Lexington, Tennessee. The definitive agreement covers both hospitals and their affiliated outpatient facilities. We currently anticipate completing the sale of these hospitals in the third quarter of 2017.

On March 31, 2017, we sold 60-bed Cherokee Medical Center and its affiliated outpatient facilities, located in Centre, Alabama, for $4.3 million. For the three months ended June 30, 2016, our operating results included a pre-tax loss of $1.0 million and pre-tax losses of $1.0 and $2.7 for the six months ended June 30, 2017 and 2016, respectively, related to Cherokee. In addition to the above, we recorded a $0.3 million gain on the sale in the first quarter of 2017.

Affordable Care Act

The Affordable Care Act, as currently structured, mandates that substantially all U.S. citizens maintain health insurance coverage, while expanding access to coverage through a combination of private sector health insurance reforms and public program expansion. In recent years, most of the states that have experienced the greatest reductions in rates of uninsured individuals have been those that expanded Medicaid coverage and established healthcare insurance exchanges at the state level. The outcome of the 2016 federal elections cast considerable uncertainty on the future of the Affordable Care Act, and it is unclear whether the trend of increased coverage will continue. In addition, several private health insurers have withdrawn, or have announced their intent to withdraw, from the healthcare insurance exchanges, which may threaten the stability of those marketplaces. Government efforts to change, alter the implementation of, or repeal the Affordable Care Act may have an adverse effect on our business, results of operations, cash flow, capital resources and liquidity.

Other Government Regulations

Our hospital operations business is highly regulated. We are required to comply with extensive, complicated and overlapping governmental laws and regulations at the federal, state and local levels. These laws and regulations govern every aspect of how our hospitals conduct their operations, including the service lines that must be offered for licensure as an acute care hospital, restrictions related to employing physicians, and requirements applicable to eligibility and payment structures under the Medicare and Medicaid programs. The failure to comply with these laws and regulations can result in severe penalties including criminal penalties, civil sanctions, and the loss of our ability to qualify for participation in the Medicare and Medicaid programs.

The rules, regulations and laws imposed on the U.S. healthcare industry are subject to ongoing and frequent changes with little or no notice and are often interpreted and applied differently by various regulatory agencies. Each change or conflicting interpretation may require us to make changes at our hospitals and other healthcare facilities related to aspects such as space usage, equipment, technology, staffing and service lines. We may also be required to revise or implement operating policies and procedures that were previously believed to be compliant. The cost of compliance with governmental laws and regulations is a significant component of our overall operating costs. Furthermore, these costs have been rising in recent years due to new regulatory requirements and increasing enforcement provisions. Management anticipates that compliance costs will continue to grow in the foreseeable future. The U.S. healthcare industry has seen a number of ongoing investigations related to patient referrals, physician recruiting and employment practices, cost reporting and billing practices, medical necessity of inpatient admissions, physician office leasing, laboratory and home

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healthcare services, physician ownership of hospitals and other healthcare providers, and joint ventures involving hospitals and physicians. Hospitals continue to be one of the primary focus areas of the Department of Health and Human Services Office of Inspector General (“OIG”), the Department of Justice (“DOJ”) and other governmental fraud and abuse regulatory authorities and programs.

Basis of Presentation

Our financial statements have been prepared under the assumption that QHC will continue as a going concern. We have limited stand-alone operating history and have experienced net losses in each of the quarters in 2016 subsequent to the Spin-off from CHS. See “— Liquidity and Capital Resources – Financial Outlook” for information on the CS Amendment and other factors impacting our future earnings projections.

Prior to our separation from CHS, QHC did not operate as a separate company and stand-alone financial statements were not historically prepared; however, QHC was comprised of certain stand-alone legal entities for which discrete financial information was available under CHS’ ownership. Our accompanying consolidated and combined financial statements include amounts and disclosures for QHC that have been derived from the consolidated financial statements and accounting records of CHS for the periods prior to the Spin-off in combination with the amounts and disclosures related to the stand-alone financial statements and accounting records of QHC after the Spin-off. See Note 16 — Related Party Transactions in the accompanying financial statements for additional information on the carve-out of financial information from CHS.

The statements of income for the three and six months ended June 30, 2016, include expense allocations for certain corporate functions provided by CHS to QHC, including, but not limited to, executive and divisional management, employee benefits administration, treasury, accounting, risk management, audit, legal, procurement, human resources, information technology support and other administrative support services. These expenses were allocated to QHC based on direct usage or benefit where identifiable, with the remainder allocated to QHC using ratios based on revenues, expenses or licensed beds. Following the Spin-off, we began performing corporate functions using internal resources or purchased services, certain of which are required to be provided by CHS pursuant to the transition services agreements and other ancillary agreements.

Our financial statements as of and for the three and six months ended June 30, 2016 include certain reclassifications to conform to the presentation as of and for the three and six months ended June 30, 2017. These reclassifications had no net effect on our results of operations, financial position or cash flows reported in the Quarterly Report on Form 10-Q for the six months ended June 30, 2016. See Note 2 — Basis of Presentation and Significant Accounting Policies — Reclassifications in the accompanying financial statements.

Revenues

We generate revenues by providing healthcare services at our hospitals and affiliated outpatient service facilities to patients seeking medical treatment. Hospital revenues depend on, among other factors, inpatient occupancy and acuity levels, the volume of outpatient procedures and the charges and negotiated reimbursement rates for the healthcare services provided. Our primary sources of payment for patient healthcare services are third-party payors, including the Medicare and Medicaid programs, Medicare and Medicaid managed care programs, commercial insurance companies, other managed care programs, workers’ compensation carriers and employers. Self-pay revenues are the portion of our revenues generated from providing healthcare services to patients who do not have health insurance coverage as well as the patient responsibility portion of charges that are not covered for an individual by a health insurance program or plan. We generate revenues related to our QHR business when management advisory and consulting services are provided. We report these revenues at their net realizable value. We generate other non-patient revenues primarily from rental income and hospital cafeteria sales.

Amounts we collect for medical treatment of patients covered by Medicare, Medicaid and non-governmental third-party payors are generally less than our standard billing rates. Our standard charges and the reimbursement rates for routine inpatient services vary significantly depending on the type of medical procedure performed and the geographical location of the hospital. Differences in our standard billing rates and the amounts we expect to collect from third-party payors are classified as contractual allowances. The reimbursements we ultimately receive as payments for services are determined for each patient instance of care, based on the contractual terms we negotiate with third-party payors or based on federal and state regulations related to governmental healthcare programs. Except for emergency department services, our policy is to determine the payment methodology with patients prior to when the services are performed. Self-pay and other payor discounts are incentives offered to uninsured or underinsured patients or other payors to reduce their costs of healthcare services with the purpose of maximizing our collection efforts.

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The following tables provide a summary of our net operating revenues, before the provision for bad debts, for the three and six months ended June 30, 2017 and 2016, and on a sequential basis for the current period, by payor source (dollars in thousands):

	Three Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	160,167		27.4	%	$	167,549		28.0	%
Medicaid		107,341		18.3	%		113,283		18.9	%
Managed care and commercial		238,448		40.7	%		230,595		38.6	%
Self-pay		55,310		9.5	%		59,171		9.9	%
Non-patient		23,949		4.1	%		27,565		4.6	%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	598,163		100.0	%
	Six Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	335,460		28.6	%	$	343,083		28.3	%
Medicaid		204,010		17.4	%		216,351		17.8	%
Managed care and commercial		470,005		40.0	%		474,879		39.2	%
Self-pay		114,390		9.8	%		123,925		10.2	%
Non-patient		49,295		4.2	%		54,409		4.5	%
Total net operating revenues, before the provision for bad debts	$	1,173,160		100.0	%	$	1,212,647		100.0	%
	Three Months Ended
	June 30, 2017					March 31, 2017
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	160,167		27.4	%	$	175,293		29.8	%
Medicaid		107,341		18.3	%		96,669		16.4	%
Managed care and commercial		238,448		40.7	%		231,557		39.4	%
Self-pay		55,310		9.5	%		59,080		10.0	%
Non-patient		23,949		4.1	%		25,346		4.4	%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	587,945		100.0	%

Charity Care

In the ordinary course of business, we provide services to patients who are financially unable to pay for hospital care. The related charges for those patients who are financially unable to pay that otherwise do not qualify for reimbursement from a governmental program are classified as charity care. We determine amounts that qualify for charity care primarily based on the patient’s household income relative to the poverty level guidelines established by the federal government. Our policy is to not pursue collections for such amounts; therefore, the related charges are recorded in operating revenues at the standard billing rates and fully offset in contractual allowances in the same period.

Electronic Health Record Incentive Payments

Pursuant to the Health Information Technology for Economic and Clinical Health (“HITECH”) Act, we are eligible to receive incentive payments under the Medicare and Medicaid programs related to our hospitals and physician clinics that demonstrate meaningful use of certified electronic health record (“EHR”) technology. These payments are available for a maximum period of five or six years, depending on the program. If we fail to demonstrate meaningful use, we are subject to payment reductions. We incur both capital expenditures and operating expenses in connection with the implementation of EHR technology initiatives. The amount and timing of these expenditures does not directly correlate with the timing of the receipt of EHR payments or the recognition of EHR incentives as earned. We record EHR incentives in our statements of income as a reduction to our operating costs and expenses. As we

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move toward our full implementation of certified EHR technology, our EHR incentives will decline and ultimately end. For the three months ended June 30, 2017 and 2016, our EHR incentives earned were $1.8 million and $4.2 million, respectively, and $4.2 million and $8.5 million for the six months ended June 30, 2017 and 2016, respectively. We anticipate that we will earn approximately $5 million of EHR incentives for the full year 2017.

Critical Accounting Policies

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts and related disclosures. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. The critical accounting estimates and judgments presented below are not intended to be a comprehensive list of all our accounting policies that require estimates, but are limited to those that involve a higher degree of judgment and complexity. We believe the current assumptions and other considerations used to estimate amounts in our financial statements are appropriate. If actual results differ from these assumptions and considerations, the resulting impact could have a material adverse effect on our results of operations and financial condition.

Third-Party Reimbursements and State Supplemental Payment Programs

Our estimate of the net realizable amount of our patient revenues due from third-party payors is subject to complexities, including interpretations of governmental regulations and payor-specific contractual agreements that are frequently changing. The Medicare and Medicaid programs, which are the payor sources for the majority of our patient revenues, are highly complex programs and subject to interpretation of federal and state-specific reimbursement rates, new or changing legislation and final cost report settlements. Contractual allowances are recorded in the period services are performed and the patient’s method of payment is verified. Estimates for contractual allowances are subject to change, in large part, due to ongoing contract negotiations and regulatory changes, which is typical in the U.S. healthcare industry. Revisions to estimates for contractual allowances are recorded in the periods in which they become known and may be subject to further revisions. All hospital contractual allowance calculations are reviewed on a monthly basis by management to ensure reasonableness and accuracy.

We use a third-party automated contractual allowance system to calculate our contractual allowances each month. Contractual allowances are calculated utilizing historical paid claims data by payor source, which is uploaded into the system each month. The key assumptions used by the system to calculate the current period estimated contractual allowances are derived on a payor-specific basis from the estimated contractual reimbursement percentage and historical paid claims data. The automated contractual allowance system does not include patient account level information, as it estimates an average contractual allowance for each payor source. Due to the complexities involved in the contractual allowance estimates, actual reimbursement payments we receive from third-party payors could be different from the amounts we estimated and recorded. If the actual contractual reimbursement percentages by payor source differed by 1% from our estimated contractual reimbursement percentages, our net loss for the six months ended June 30, 2017 would have changed by $20.6 million. If we applied a 1% differential to our patient accounts receivable due from governmental, managed care and commercial third-party payors as of June 30, 2017, patient accounts receivable, net would have changed by $21.2 million.

Cost report settlements under reimbursement programs with Medicare, Medicaid and other managed care plans are estimated and recorded in the period patient services are performed and any revisions to estimates of previous program reimbursements are recorded in subsequent periods until the final cost report settlements are determined. We account for cost report settlements in contractual allowances in our statements of income and record these amounts as due from and due to third-party payors on our balance sheets. Contractual allowance adjustments related to previous program reimbursements and final cost report settlements favorably (unfavorably) impacted net operating revenues $1.4 million and $(2.5) million during the three months ended June 30, 2017 and 2016, respectively, and less than $(0.1) million and $(4.4) million during the six months ended June 30, 2017 and 2016, respectively.

Several states utilize supplemental payment programs, including disproportionate share programs, for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. The amounts due to us under such programs are included in due from third-party payors on our balance sheets. These programs have participation costs, referred to as fees or provider taxes. We record these costs in due to third-party payors on our balance sheets. After a state supplemental program is approved and fully authorized, we recognize the reimbursement payments due to us from state supplemental payment programs in the periods amounts are estimable and revenue collection is reasonably assured. These amounts are recorded in operating revenues as favorable contractual allowances and the costs we incur under these programs are recorded as other operating expenses. We record the revenues as favorable contractual allowance adjustments in our net operating revenues and the related provider taxes as other operating expenses in our statements of income.

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The following table shows the portion of our Medicaid reimbursements attributable to state supplemental payment programs for the three and six months ended June 30, 2017 and 2016, and on a sequential basis for the current quarter (in thousands):

	Three Months Ended				Six Months Ended				Three Months Ended
	June 30,		June 30,		June 30,		June 30,		June 30,		March 31,
	2017		2016		2017		2016		2017		2017
Medicaid revenues	$	46,381	$	55,105	$	91,678	$	107,320	$	46,381	$	45,297
Provider taxes and other expenses		17,230		18,604		34,123		38,030		17,230		16,893
Reimbursements attributable to state supplemental payment programs, net of expenses	$	29,151	$	36,501	$	57,555	$	69,290	$	29,151	$	28,404

The California Department of Health Care Services implemented the HQAF Program, imposing a fee on certain general and acute care California hospitals. Revenues generated from these fees provide funding for the non-federal supplemental payments to California hospitals that serve California’s Medi-Cal and uninsured patients. Under the most recent phase of the program, covering the period January 2014 through December 2016, we recognized $11.3 million of Medicaid revenues for the three months ended June 30, 2016 and $2.7 million of provider taxes, for the three months ended June 30, 2016 and $22.3 million of Medicaid revenues and $5.4 million of provider taxes for the six months ended June 30, 2016. We have not recognized any revenues related to the HQAF program in 2017.

In November 2016, California voters approved a state constitutional amendment measure that extends indefinitely the statute that imposes fees on California hospitals seeking federal matching funds. However, the current program expired on December 31, 2016 and CMS has not approved a new program. Consistent with the first four phases of the HQAF Program, we will not recognize any revenues under the new program until CMS completes the approval process. HQAF funding levels are based in part on Medi-Cal utilization. As a result, changes in coverage of individuals under the Medi-Cal program could affect the revenues and cash flows of our California hospitals under future phases of the HQAF Program. We are currently estimating the 2017 to 2019 HQAF Program will be approved in the fourth quarter of 2017 and that our revenues will be approximately $21 million for the year ended December 31, 2017, all of which we anticipate will be recorded in the fourth quarter. We cannot provide any assurances of the amount of revenues our hospitals may receive from or the timing of CMS’ approval of the 2017 to 2019 HQAF Program, the timing of the related cash flows, or that the program will be approved at all.

The following table provides a summary of the components of due from and due to third-party payors (in thousands):

	June 30,		December 31,
	2017		2016
Amounts due from third-party payors:
Previous program reimbursements and final cost report settlements	$	22,182	$	23,876
State supplemental payment programs		74,990		92,359
Total amounts due from third-party payors	$	97,172	$	116,235
Amounts due to third-party payors:
Previous program reimbursements and final cost report settlements	$	31,535	$	33,366
State supplemental payment programs		7,346		9,171
Total amounts due to third-party payors	$	38,881	$	42,537

Provision for Bad Debts and Allowance for Doubtful Accounts

The following table provides a summary of patient accounts receivable, before contractual allowances, discounts and allowance for doubtful accounts, by payor source (dollars in thousands):

	June 30, 2017					December 31, 2016
	$  Amount		% of Total			$  Amount		% of Total
Third-parties	$	2,119,455		77.3	%	$	1,930,103		74.6	%
Self-pay		621,630		22.7	%		656,373		25.4	%
Total patient accounts receivable, gross	$	2,741,085		100.0	%	$	2,586,476		100.0	%

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Substantially all of our accounts receivable are related to providing healthcare services to patients at our hospitals and outpatient service facilities. Collection of these accounts receivable is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and the patient financial responsibility portion of payments due from insured patients, generally deductibles and co-payments. Our policy is to verify the health insurance coverage of a patient prior to the procedure date for all medical treatment scheduled in advance. We do not verify insurance coverage in advance of treatment for walk-in and emergency room patients.

We estimate our allowance for doubtful accounts by reserving a percentage of all self-pay patient receivables without regard to aging category, based on collection history. The allowance percentage is based on a model that considers historical write-off activity and is adjusted for expected recoveries and any anticipated changes in trends. Our ability to estimate the allowance for doubtful accounts is not significantly impacted by the aging of accounts receivable as management believes that substantially all of the risk exists at the point in time such accounts are identified as self-pay. For our insured receivables, which are non-self-pay receivables, we estimate the allowance for doubtful accounts based on historical collection rates for the uncontractualized portion of all accounts aging over 365 days from the date of patient discharge, reduced by an estimate for expected recoveries. Generally, these non-self-pay accounts receivable aged over 365 days represent an immaterial percentage of our total patient accounts receivable on our balance sheets. We believe that we collect substantially all of our third-party insured receivables, which include receivables from governmental agencies.

Collections are impacted by the economic ability of patients to pay and the effectiveness of CHS’ collection efforts, including their current policies on collections, and our own efforts to further attempt collection. As previously stated, billings and collections are outsourced to CHS under the transition services agreements that were put in place with the Spin-off. See Note 16 — Related Party Transactions in the accompanying financial statements for additional information on these agreements. Significant changes in payor mix, economic conditions or trends in federal and state governmental healthcare coverage, among other things, could affect our collection levels and are considered in our estimate of the allowance for doubtful accounts each period. We also continually review our overall allowance adequacy by monitoring historical cash collections experience, revenue trends by payor classification and days revenue outstanding.

Our policy is to write off gross accounts receivable if the balance is under $10.00 or when such amounts are placed with outside collection agencies. We believe this policy accurately reflects our ongoing collection efforts and is consistent with practices within the U.S. healthcare industry. We had approximately $434.2 million and $420.3 million of past due patient account balances at June 30, 2017 and December 31, 2016, respectively, being pursued by secondary collection agencies, excluding accounts being pursued by PASI under the transition services agreement. We expect to collect less than 3%, net of estimated collection fees, of the amounts being pursued by these secondary collection agencies. As these amounts have been written-off, they are not included in our gross accounts receivable or our allowance for doubtful accounts. Collections of any account balances previously written off are recognized as a reduction to bad debt expense when received. However, we take into consideration estimated collections of these future amounts written-off in evaluating the reasonableness of our allowance for doubtful accounts.

For self-pay receivables, the total amount of contractual allowances, discounts and the allowance for doubtful accounts that reduces these receivables to their net carrying value as recorded in the balance sheets was $540.0 million and $571.7 million as of June 30, 2017 and December 31, 2016, respectively. If our self-pay receivables being pursued by secondary collection agencies were included in both gross self-pay receivables and the allowance for doubtful accounts above, the allowance for doubtful accounts related to self-pay receivables as a percentage of gross self-pay receivables would have been 92.3% and 92.1% at June 30, 2017 and December 31, 2016, respectively. If our actual collection percentage differed by 1% from our estimated collection percentage as a result of a change in recoveries, our net loss for the six months ended June 30, 2017 would have changed by $6.1 million. If we applied a 1% differential to our estimate of the allowance for doubtful accounts related to self-pay receivables as of June 30, 2017, our patient accounts receivable, net would have changed by $6.2 million.

Days revenue outstanding related to patients accounts receivable, excluding amounts recorded as due to third-party payors, was 70 and 68 days as of June 30, 2017 and December 31, 2016, respectively. The portion of our allowance for doubtful accounts representing an adjustment for expected recoveries of self-pay receivables aged over 365 days that have been placed with outside collection agencies was 6 days as of June 30, 2017.

Impairment of Long-Lived Assets and Goodwill

Whenever an event occurs or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, we project the undiscounted cash flows expected to be generated by those assets. If the projections indicate that the carrying values are not expected to be recovered, the assets are reduced to their estimated fair value based on a quoted market price, if available, or an estimated value based on valuation techniques available in the circumstances.

Our hospital operations and hospital management advisory and healthcare consulting services operations meet the criteria to be classified as reporting units for goodwill. Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of a reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying

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amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required. Step two is to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. When an indicator of potential impairment is identified in interim periods, we evaluate goodwill for impairment at such date.

We perform our annual goodwill impairment evaluation in the fourth quarter of each year. For our annual evaluation, we estimate the fair value of each of our reporting units utilizing two modeling approaches, a discounted cash flow model and an earnings multiple model. The discounted cash flow model applies a discount rate to our cash flow forecasts that is based on our best estimate of our weighted-average cost of capital. The earnings multiple model applies a market supported multiple to EBITDA. Both models are based on our best estimate of future revenues and operating costs and expenses as of the testing date. Additionally, the results of both models are reconciled to our consolidated market capitalization, which considers the amount a potential buyer would be required to pay, in the form of a control premium, to gain sufficient ownership to set policies, direct operations and control management decisions of our company.

During the three months ended June 30, 2017, we recognized $12.9 million of impairment to property and equipment of certain hospitals which we have identified as potential divestiture candidates and for which we have received letters of intent. During the three months ended March 31, 2017, management made a decision to classify certain additional hospitals as held for sale. In connection with this decision, we evaluated the estimated relative fair value of the hospitals classified as held for sale in relation to the overall fair value of the hospital operations reporting unit utilizing a September 30, 2016 measurement date, which was the measurement date of our most recent annual goodwill impairment analysis, and recognized $3.3 million of impairment to long-lived assets and goodwill during the three months ended March 31, 2017, which consisted of $1.1 million of property and equipment, $0.8 million of capitalized software costs and $1.4 million of goodwill. See Note 3 — Impairment of Long-Lived Assets and Goodwill in our accompanying financial statements for information on our 2016 impairment charges.

Workers’ Compensation and Professional and General Liability Insurance Reserve

As part of the business of owning and operating hospitals, we are subject to legal actions alleging liability on our part. To mitigate a portion of this risk, we maintain insurance exceeding a self-insured retention level for these types of claims. Our self-insurance reserves reflect the current estimate of all outstanding losses, including incurred but not reported losses, based upon actuarial calculations as of period end. The loss estimates included in the actuarial calculations may change in the future due to updated facts and circumstances. Insurance expense in the statements of income includes the actuarially determined estimates for losses in the current year, including claims incurred but not reported, the changes in estimates for losses in prior years based upon actual claims development experience as compared to prior actuarial projections, the insurance premiums for losses related to policies obtained to cover amounts in excess of our self-insured retention levels, the administrative costs of the insurance programs, and interest expense related to the discounted portions of these liabilities. Our reserves for workers’ compensation and professional and general liability claims are based on semi-annual actuarial calculations, which are discounted to present value and consider historical claims data, demographic factors, severity factors and other actuarial assumptions. The liabilities for self-insured claims are discounted based on our risk-free interest rate that corresponds to the period when the self-insured claims are incurred and projected to be paid.

A portion of our reserves for workers’ compensation and professional and general liability claims included on our balance sheets relates to incurred but not report claims prior to the Spin-off. These claims were fully indemnified by CHS under the terms of the Separation and Distribution Agreement. As a result, we have a corresponding receivable from CHS related to these claims on our balance sheets. See Note 17 — Commitments and Contingencies in our accompanying financial statements for tables that summarize the receivables and liabilities associated with these insurance reserves as of June 30, 2017 and December 31, 2016.

Income Taxes

The breadth of our operations and the complexity of tax regulations require assessments of uncertainties and judgments in estimating the amount of income taxes that we will ultimately pay. The amount of final income taxes ultimately paid by us is dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal and state tax audits in the normal course of business.

We calculate our provision for income taxes and account for income taxes using the asset and liability method. Under this method, deferred income taxes are recorded to represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred income taxes during the year. Deferred income taxes result from differences between the financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and the enactment of new or amended tax laws.

Under the asset and liability method, valuation allowances are recorded to reduce deferred income tax assets when it is more likely than not that a tax benefit will not be realized. We assess the realization of our deferred tax assets to determine whether an income tax valuation allowance is required. Based on all available evidence, both positive and negative, and the weight of that evidence to the extent such evidence can be objectively verified, we determine whether it is more likely than not that all or a portion of the deferred tax assets will be realized.

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The main factors that we consider include:

• cumulative earnings or losses in recent years, adjusted for certain nonrecurring items;

• expected earnings or losses in future years;

• unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and earnings levels;

• the availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of tax benefits; and

• the carryforward period associated with the deferred tax assets and liabilities.

In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record deferred income tax benefits for all tax years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date about the ability to realize the benefit of the deferred tax assets or tax positions. For those tax positions where it is more likely than not that a future tax benefit will be sustained, our policy is to record the largest amount of income tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that an income tax benefit will not be sustained in the future, we do not recognize a deferred tax benefit in our financial statements. We record interest and penalties, net of any applicable tax benefit, related to income taxes, if any, as a component of the provision for income taxes when applicable.

See Note 11 — Income Taxes in our accompanying financial statements for additional information on the use of the separate return method of accounting for income taxes that we used during the carve-out period.

New Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Accounting for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. This ASU instead permits an entity to recognize goodwill impairment loss as the excess of a reporting unit's carrying value over the estimated fair value of the reporting unit, to the extent this amount does not exceed the carrying amount of goodwill. The new guidance continues to allow an entity to perform a qualitative assessment over goodwill impairment indicators in lieu of a quantitative assessment in certain situations. The ASU is effective for our annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact this guidance may have on our results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation, which was issued to simplify some of the accounting guidance for share-based compensation. Among the areas impacted by the amendments in this ASU are the accounting for income taxes related to share-based payments, accounting for forfeitures, classification of awards as equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. We adopted this ASU on January 1, 2017. The adoption of this ASU had no material impact on our results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the accounting for leases, requiring lessees to recognize most leases on their balance sheet with a right-of-use asset and a lease liability. Leases will be classified as either finance or operating leases, which will impact the expense recognition of such leases over the lease term. The ASU also modifies the lease classification criteria for lessors and eliminates some of the real estate leasing guidance previously applied for certain leasing transactions. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We expect to adopt this ASU on January 1, 2019. We utilize a number of leases to support our operations. As such, the adoption of this ASU is expected to have a significant impact on our financial position. We are currently evaluating the quantitative and qualitative impact the adoption of this ASU will have on our operations, policies and procedures. We are additionally evaluating any modifications to our leasing strategy in response to the requirements of this standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides for a single comprehensive principles-based model for the recognition of revenue across all industries using a five-step model to recognize revenue from customer contracts. The new standard significantly expands disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows as well as certain additional quantitative and qualitative disclosures. The standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016, and permits the use of either a full or modified retrospective approach upon adoption. In preparation for adoption of the ASU, we have established an implementation team that is evaluating the current impact the new standard will have on our revenue recognition policies, procedures, financial position, results of operations, cash flows, financial disclosures and control framework. Specifically, we are quantifying the impact on our results of operations, financial position and cash flows in order to determine which method, either full or modified retrospective, to use upon adoption. We are using a program management approach for the various revenue streams to accomplish the revenue, financial reporting and organizational impact analysis according to project milestones to ensure a systematic and timely process that will allow consideration of impact findings in the selection and implementation of a

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transition method. We cannot reasonably estimate at this time the quantitative impact that the adoption of this accounting standard will have on our consolidated financial statements. We note that industry guidance continues to develop and that further guidance regarding third-party reimbursements and other reimbursement programs unique to the healthcare industry may be issued in later 2017, which may impact our evaluation. In addition to new and expanded disclosures, we anticipate that the most significant impact will be to the presentation of the income statement, as the provision for doubtful accounts will be recorded as a direct reduction to revenues and will not be presented as a separate line item.

Results of Operations

A summary of our results of operations, including certain operating and financial data for the three and six months ended June 30, 2017 and 2016, and on a sequential basis for the current quarter, is included below. The definitions of certain terms used throughout “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” follows:

Consolidated and Combined. Our financial statements include amounts and disclosures related to the stand-alone financial statements and accounting records of QHC after the Spin-off (“consolidated”) in combination with amounts and disclosures that have been derived for the businesses comprising QHC from the consolidated financial statements and accounting records of CHS for the periods prior to the completion of the Spin-off (“combined”). Any references to our financial statements, financial data and operating data refer to our consolidated and combined financial statements unless otherwise noted.

Same-facility. Same-facility financial and operating data, as presented in the comparative discussions herein, includes hospitals that are owned or leased during all periods. Our same-facility operating results for the three and six months ended June 30, 2017 and 2016, and the three months ended March 31, 2017, which are reported herein, have been adjusted to exclude the operating results of Sandhills, Barrow, and Cherokee which we sold on December 1, 2016, December 31, 2016 and March 31, 2017, respectively. Our same-facility operating results for the periods reported herein includes the operating results of Trinity since this hospital was not sold until June 30, 2017.

Bps Variance. In certain tables and discussions below, we have included a variance column that represents the subtraction of the basis points in the prior period percentage of revenues column from the basis points in the current period percentage of revenues column.

Licensed Beds. Licensed beds are the number of beds for which the appropriate state agency licenses a hospital, regardless of whether the beds are actually available for patient use.

Admissions. Admissions represent the number of patients admitted for inpatient services.

Adjusted Admissions. Adjusted admissions is computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.

Continuing Hospitals Group. The Continuing Hospitals Group consists of twenty-four hospitals which we currently intend to continue to operate as part of our core business.

Divestitures Group. The Divestitures Group includes all hospitals that have been divested by us since the Spin-off. As of June 30, 2017, the Divestitures Group includes Barrow, Sandhills, Cherokee and Trinity. This group of hospitals has certain ongoing operations during the wind-down process related to the assets and liabilities which were not part of the hospital sales, typically accounts receivable collections or write-offs, prior period contractual adjustments associated with the Medicare and Medicaid programs through final cost report settlement and certain minimal operating expenses.

Potential Divestitures Group. The Potential Divestitures Group includes ten hospitals that management has identified for potential divestiture over the next twelve to fifteen month period. We are actively pursuing the sales of these hospitals and have received letters of intent on five of the hospitals with anticipated closing dates in the third quarter of 2017.

Emergency Room Visits. Emergency room visits represent the number of patients registered and treated in our emergency rooms.

Medicare Case Mix Index. Medicare case mix index is a relative value assigned to a diagnosis-related group of patients that is used in determining the allocation of resources necessary to treat the patients in that group. Medicare case mix index is calculated as the average case mix index for all Medicare admissions during the period.

Hospital Operations Man-Hours per Adjusted Admission. Hospital operations man-hours per adjusted admission is calculated as total paid employed and contract labor hours, including both hospitals and affiliated outpatient facilities including clinics, divided by adjusted admissions. It is used by management as a measure of productivity.

Days Revenue Outstanding. Days revenue outstanding approximates the average collection period for patient accounts receivable. It is calculated by dividing net patient accounts receivable at the end of the period by average net operating revenues per day for the most recent three months. Net patient accounts receivable excludes the amounts reported as due from and due to third-party payors related to final cost report settlements and state supplemental payment programs.

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EBITDA. EBITDA is a non-GAAP financial measure that consists of net income (loss) before interest, income taxes, depreciation and amortization.

Adjusted EBITDA. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back the effect of certain legal, professional and settlement costs, impairment of long-lived assets and goodwill, net gain (loss) on sale of hospitals, transaction costs related to the Spin-off, and severance costs for post-spin headcount reductions. We use Adjusted EBITDA as a measure of financial performance. Adjusted EBITDA is a key measure used by our management to assess the operating performance of our hospital operations business and to make decisions on the allocation of resources. Additionally, management utilizes Adjusted EBITDA in assessing our consolidated results of operations and in comparing our results of operations between periods.

Adjusted EBITDA, Adjusted for Divestitures. Adjusted EBITDA, Adjusted for Divestitures, also a non-GAAP financial measure, is further adjusted to exclude the effect of EBITDA of the Divestitures Group. We present Adjusted EBITDA, Adjusted for Divestitures because management believes this measure provides investors and other users of our financial statements with additional information about how management assesses the results of operations.

Adjusted EBITDA, Adjusted for Potential Divestitures. Adjusted EBITDA, Adjusted for Potential Divestitures, also a non-GAAP financial measure, is Adjusted EBITDA, Adjusted for Divestitures, and further adjusted to exclude the effect of EBITDA of the Potential Divestitures Group. We present Adjusted EBITDA, Adjusted for Potential Divestitures because management believes this measure provides investors and other users of our financial statements with additional information about how management assesses the results of operations.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

The following table provides a summary of our results of operations, both in dollars and as a percentage of net operating revenues (dollars in thousands):

	Three Months Ended June 30,
	2017						2016
				% of						% of
	$ Amount			Revenues			$ Amount			Revenues
Operating revenues, net of contractual allowances and discounts	$	585,215					$	598,163
Provision for bad debts		55,069						68,426
Net operating revenues		530,146			100.0	%		529,737			100.0	%
Operating costs and expenses:
Salaries and benefits		265,309			50.0	%		264,886			50.0	%
Supplies		64,112			12.1	%		64,136			12.1	%
Other operating expenses		157,613			29.8	%		163,185			30.8	%
Depreciation and amortization		20,586			3.9	%		31,463			5.9	%
Rent		12,152			2.3	%		12,545			2.4	%
Electronic health records incentives earned		(1,777	)		(0.3	)%		(4,247	)		(0.8	)%
Legal, professional and settlement costs		3,934			0.7	%		5,447			1.0	%
Impairment of long-lived assets and goodwill		12,900			2.4	%		250,400			47.3	%
Loss (gain) on sale of hospitals, net		(4,321	)		(0.8	)%		—			—	%
Transaction costs related to the Spin-off		—			—	%		1,177			0.2	%
Total operating costs and expenses		530,508			100.1	%		788,992			148.9	%
Income (loss) from operations		(362	)		(0.1	)%		(259,255	)		(48.9	)%
Interest expense, net		30,458			5.7	%		29,276			5.6	%
Income (loss) before income taxes		(30,820	)		(5.8	)%		(288,531	)		(54.5	)%
Provision for (benefit from) income taxes		(245	)		0.0	%		(44,565	)		(8.4	)%
Net income (loss)		(30,575	)		(5.8	)%		(243,966	)		(46.1	)%
Less: Net income (loss) attributable to noncontrolling interests		55			—	%		1,095			0.2	%
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)		(5.8	)%	$	(245,061	)		(46.3	)%

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The following table reconciles Adjusted EBITDA, Adjusted EBITDA, Adjusted for Divestitures and Adjusted EBITDA, Adjusted for Potential Divestitures, to net income (loss), the most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended June 30,
	2017			2016
Net income (loss)	$	(30,575	)	$	(243,966	)
Interest expense, net		30,458			29,276
Provision for (benefit from) income taxes		(245	)		(44,565	)
Depreciation and amortization		20,586			31,463
EBITDA		20,224			(227,792	)
Legal, professional and settlement costs		3,934			5,447
Impairment of long-lived assets and goodwill		12,900			250,400
Loss (gain) on sale of hospitals, net		(4,321	)		—
Transaction costs related to the Spin-off		—			1,177
Post-spin headcount reductions		1,693			—
Adjusted EBITDA		34,430			29,232
Negative EBITDA of divested hospitals		4,716			6,060
Adjusted EBITDA, Adjusted for Divestitures		39,146			35,292
Negative EBITDA of potential divestitures		1,762			1,699
Adjusted EBITDA, Adjusted for Potential Divestitures	$	40,908		$	36,991

Revenues

The following table provides information related to our net operating revenues (dollars in thousands, except per adjusted admission amounts):

	Three Months Ended June 30,
	2017		2016		$ Variance			% Variance
Consolidated and combined:
Net patient revenues, before the provision for bad debts	$	561,266	$	570,598	$	(9,332	)		(1.6	)%
Provision for bad debts		55,069		68,426		(13,357	)		(19.5	)%
Total net patient revenues		506,197		502,172		4,025			0.8	%
Non-patient revenues		23,949		27,565		(3,616	)		(13.1	)%
Total net operating revenues	$	530,146	$	529,737	$	409			0.1	%
Net patient revenues per adjusted admission	$	9,099	$	8,520	$	579			6.8	%
Net operating revenues per adjusted admission	$	9,529	$	8,987	$	542			6.0	%
Same-facility:
Net patient revenues, before the provision for bad debts	$	561,538	$	546,896	$	14,642			2.7	%
Provision for bad debts		55,076		61,322		(6,246	)		(10.2	)%
Total net patient revenues		506,462		485,574		20,888			4.3	%
Non-patient revenues		23,930		27,319		(3,389	)		(12.4	)%
Total net operating revenues	$	530,392	$	512,893	$	17,499			3.4	%
Net patient revenues per adjusted admission	$	9,103	$	8,713	$	390			4.5	%
Net operating revenues per adjusted admission	$	9,534	$	9,203	$	331			3.6	%

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The following table provides information related to our net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Three Months Ended June 30,
	2017					2016					2017 vs 2016
	$  Amount		% of Total			$  Amount		% of Total			$ Variance			bps Variance
Consolidated and combined:
Medicare	$	160,167		27.4	%	$	167,549		28.0	%	$	(7,382	)		(0.6	)%
Medicaid		107,341		18.3	%		113,283		18.9	%		(5,942	)		(0.6	)%
Managed care and commercial		238,448		40.7	%		230,595		38.6	%		7,853			2.1	%
Self-pay		55,310		9.5	%		59,171		9.9	%		(3,861	)		(0.4	)%
Non-patient		23,949		4.1	%		27,565		4.6	%		(3,616	)		(0.5	)%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	598,163		100.0	%	$	(12,948	)
Same-facility:
Medicare	$	161,633		27.6	%	$	160,966		28.0	%	$	667			(0.4	)%
Medicaid		107,337		18.3	%		109,591		19.1	%		(2,254	)		(0.8	)%
Managed care and commercial		237,367		40.6	%		223,168		38.8	%		14,199			1.8	%
Self-pay		55,201		9.4	%		53,171		9.3	%		2,030			0.1	%
Non-patient		23,930		4.1	%		27,319		4.8	%		(3,389	)		(0.7	)%
Total net operating revenues, before the provision for bad debts	$	585,468		100.0	%	$	574,215		100.0	%	$	11,253

The following table provides information related to certain drivers of our net operating revenues:

	Three Months Ended June 30,
	2017		2016		Variance			% Variance
Consolidated and combined:
Number of licensed beds at end of period		3,168		3,579		(411	)		(11.5	)%
Admissions		22,270		23,618		(1,348	)		(5.7	)%
Adjusted admissions		55,634		58,942		(3,308	)		(5.6	)%
Emergency room visits		167,575		182,301		(14,726	)		(8.1	)%
Medicare case mix index		1.43		1.38		0.05			3.6	%
Same-facility:
Number of licensed beds at end of period		3,168		3,168		—			—	%
Admissions		22,270		22,617		(347	)		(1.5	)%
Adjusted admissions		55,634		55,730		(96	)		(0.2	)%
Emergency room visits		167,575		171,779		(4,204	)		(2.4	)%
Medicare case mix index		1.41		1.39		0.02			1.4	%

Net operating revenues for the three months ended June 30, 2017 increased $0.4 million compared to the three months ended June 30, 2016, consisting of a $4.0 million increase in net patient revenues and a $3.6 million decrease in non-patient revenues. Our net patient revenues, before the provision for bad debts, decreased $9.3 million, or 1.6%, consisting of a $24.9 million decline from the Divestitures Group, a $3.6 million increase in the Potential Divestitures Group and a $12.0 million increase in the Continuing Hospitals Group. Our net patient revenues, before the provision for bad debts, of the Continuing Hospitals Group does not include any revenues from the California HQAF program in the 2017 period due to the pending approval by CMS of the program for the 2017 – 2019 period. The three months ended June 30, 2016 included revenues of $11.3 million from this program. Excluding this item, net patient revenues of the Continuing Hospitals Group increased $23.3 million, consisting of $7.7 million from volumes and $15.6 million from payor rates. On a consolidated basis, admissions and adjusted admissions declined 5.7% and 5.6%, respectively, for the three months ended June 30, 2017 compared to the same 2016 period. For the Continuing Hospitals Group, admissions and adjusted admissions increased 1.5% and 2.6%, respectively, for the three months ended June 30, 2017 compared to the same 2016 period. Non-

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patient revenues decreased $3.6 million primarily related to our management advisory and consulting services business in the 2017 period.

Provision for Bad Debts

The provision for bad debts decreased $13.4 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily due to a $7.0 million decrease of the Divestitures Group and a $3.5 million reduction in the reserve for accounts aged greater than 365 days due to the improved collectability of those accounts.

Salaries and Benefits

The following table provides information related to our salaries and benefits expenses (dollars in thousands, except per adjusted admission amounts):

	Three Months Ended June 30,
	2017		2016		$ Variance			% Variance
Salaries and benefits	$	265,309	$	264,886	$	423			0.2	%
Hospital operations salaries and benefits	$	240,459	$	243,334	$	(2,875	)		(1.2	)%
Hospital operations salaries and benefits per adjusted admission	$	4,322	$	4,128	$	194			4.7	%
Hospital operations man-hours per adjusted admission		105.6		103.9		1.7			1.6	%

Salaries and benefits increased $0.4 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Salaries and benefits declined $9.7 million related to the Divestitures Group and $2.1 million related to the Potential Divestitures Group primarily resulting from decreased adjusted admissions of 5.2% for the three months ended June 30, 2016 compared to the same 2016 period. These declines were offset by an increase of $9.0 million for the Continuing Hospitals Group primarily resulting from increased adjusted admissions of 2.6% for these same periods. The portion of our salaries and benefits expenses related to corporate functions was $11.0 million and $6.4 million in the three months ended June 30, 2017 and 2016, respectively, which included $2.5 million and $1.9 million of stock-based compensation for these respective periods. Prior to the Spin-off, management fees were allocated to QHC for corporate functions of CHS and were included in other operating expenses. The increase in corporate salaries and benefits as a result of the Spin-off was partially offset by a reduction in corporate and QHR salaries and benefits in the 2017 period when compared to the post-spin portion of the 2016 period due to headcount reductions in November 2016 and May 2017.

Supplies

The following table provides information related to our supplies expense (dollars in thousands, except per adjusted admissions amounts):

	Three Months Ended June 30,
	2017		2016		$ Variance			% Variance
Supplies	$	64,112	$	64,136	$	(24	)		—	%
Supplies per adjusted admission	$	1,152	$	1,088	$	64			5.9	%

Supplies expense for the three months ended June 30, 2017 compared to the three months ended June 30, 2016 was relatively flat. Supplies expense declined $2.1 million related to the Divestitures Group and $0.3 million related to the Potential Divestitures Group. Supplies expense of the Continuing Hospitals Group increased $2.4 million, primarily due to increases in implant costs and a decline in rebates and administrative fee reimbursements from the renegotiated contract with our group purchasing organization in connection with the Spin-off.

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Other Operating Expenses

The following table provides information related to our other operating expenses (dollars in thousands):

	Three Months Ended June 30,
	2017		2016		$ Variance			% Variance
Purchased services	$	43,843	$	44,636	$	(793	)		(1.8	)%
Taxes and insurance		33,610		34,261		(651	)		(1.9	)%
Medical specialist fees		28,888		25,182		3,706			14.7	%
Transition services agreements and allocations from Parent		15,986		17,841		(1,855	)		(10.4	)%
Repairs and maintenance		9,759		10,730		(971	)		(9.0	)%
Utilities		6,727		7,001		(274	)		(3.9	)%
Management fees from Parent		—		2,966		(2,966	)		(100.0	)%
Other miscellaneous operating expenses		18,800		20,568		(1,768	)		(8.6	)%
Total other operating expenses	$	157,613	$	163,185	$	(5,572	)		(3.4	)%

Other operating expenses decreased $5.6 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Other operating expenses declined $7.1 million related to the Divestitures Group and declined $2.7 million related to provider taxes included in the 2016 period with no comparable expense in the 2017 period related to the California HQAF program, which has not yet been approved by CMS for the 2017-2019 program period. The remaining reduction in other operating expenses primarily relate to corporate salaries and benefits being allocated as management fees from Parent in the portion of the 2016 period prior to the Spin-off. Offsetting these amounts, we had a $3.7 million increase in medical specialists fees primarily due to new contracts related to emergency room services and subsidies to various third parties, including hospitalists. We are disputing in arbitration certain charges under the transition services agreements with our former Parent.

Depreciation and Amortization

Depreciation and amortization expense decreased $10.9 million during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. This decrease was primarily due to the overall reduction in our long-lived assets due to divestitures, impairment charges reducing the asset bases of our long-lived assets and the discontinuation of depreciation and amortization related to long-lived assets upon being reclassified as held for sale.

Rent

Rent expense for the three months ended June 30, 2017 decreased $0.4 million compared to the three months ended June 30, 2016. As a percentage of net operating revenues, rent expense was comparable for these periods.

Electronic Health Records Incentives Earned

Electronic health records incentives earned decreased $2.5 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016 primarily due to the decrease in activity as we move closer toward full implementation of EHR. See Note 2 — Basis of Presentation and Significant Accounting Policies in the accompanying financial statements for additional information on EHR.

Legal, Professional and Settlement Costs

Legal, professional and settlement costs decreased $1.5 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016 primarily due to costs in the 2016 period related to a QHR legal matter which was ultimately settled in the first quarter of 2017. Legal, professional and settlement costs include legal costs and related settlements, if any, associated with regulatory claims, government investigations into reimbursement payments, claims related to QHR contracts and costs of projects approved by the Board.

Impairment of Long-Lived Assets and Goodwill

We recognized $12.9 million of impairment to long-lived assets during the three months ended June 30, 2017 of certain hospitals which we have identified as potential divestiture candidates and for which we have received letters of intent.

We recognized impairment of $250.4 million to long-lived assets in the three months ended June 30, 2016, consisting of $41.0 million to property and equipment, $4.4 million to capitalized software assets and $205.0 million to goodwill. Our goodwill impairment analysis included an assessment of $5.0 million of impairment to hospitals reclassified in this period to held for sale. The remaining $200.0 million of impairment was recognized as a result of a preliminary step-two impairment analysis in which we determined the implied fair value of goodwill related to our hospital operating reporting unit in a hypothetical purchase price

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allocation. This amount was subsequently adjusted downward to $120.0 million in the fourth quarter of 2016 upon finalizing the step-two impairment analysis.

Loss (Gain) on Sale of Hospitals, Net

We recognized a $4.3 million gain on the sale of hospitals, net in the three months ended June 30, 2017 primarily related to the sale of Trinity in the second quarter of 2017. See Note 4 — Divestitures in the accompanying financial statements for additional information on divestitures.

Interest Expense, Net

The following table provides information related to interest expense, net (in thousands):

	Three Months Ended June 30,
	2017			2016			$ Variance			% Variance
Senior Credit Facility:
Revolving Credit Facility	$	192		$	85		$	107			125.9	%
Term Loan Facility		16,642			10,432			6,210			59.5	%
ABL Credit Facility		613			82			531			647.6	%
Senior Notes		11,629			8,914			2,715			30.5	%
Amortization of debt issuance costs and discounts		2,224			1,191			1,033			86.7	%
All other interest expense (income), net		(842	)		(359	)		(483	)		134.5	%
Total interest expense, net, from long-term debt		30,458			20,345			10,113			49.7	%
Due to Parent, net		—			8,931			(8,931	)		(100.0	)%
Total interest expense, net	$	30,458		$	29,276		$	1,182			4.0	%

Interest expense, net increased $1.2 million for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Following the Spin-off, interest expense is calculated based on the terms of our credit agreements and senior notes. The effective interest rates for our Term Loan Facility and Senior Notes were approximately 8.8% and 12.5%, respectively, at June 30, 2017 and 7.6% and 12.5% at June 30, 2016. Our Senior Credit Facility was amended on April 11, 2017, which increased the interest rate terms on our Term Loan Facility. Additionally, for the portion of the 2016 period prior to the Spin-off, we were charged interest on the amounts due to CHS at various rates ranging from 4% to 7%. Interest computations on this indebtedness were based on the outstanding balance of Due to Parent, net at the end of each month. This debt with CHS was extinguished on April 29, 2016. See Liquidity and Capital Resources below and Note 7 – Long-Term Debt in the accompanying financial statements for additional information on our indebtedness.

Provision for (Benefit from) Income Taxes

Benefit from income taxes was $0.2 million for the three months ended June 30, 2017 and $44.6 million for the three months ended June 30, 2016. Our effective tax rates were 0.8% and 15.4% for these respective periods. The decrease in our effective tax rate for the three months ended June 30, 2017 when compared to the three months ended June 30, 2016 was primarily due to recording a valuation allowance against the deferred tax assets arising from our pre-tax loss in the 2017 period that are not more likely than not to be recognized.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests was $0.1 million and $1.1 million in the three months ended June 30, 2017 and 2016, respectively. As a percentage of net operating revenues, it was relatively flat.

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Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

The following table provides a summary of our results of operations, both in dollars and as a percentage of net operating revenues (dollars in thousands):

	Six Months Ended June 30,
	2017						2016
				% of						% of
	$ Amount			Revenues			$ Amount			Revenues
Operating revenues, net of contractual allowances and discounts	$	1,173,160					$	1,212,647
Provision for bad debts		115,374						133,359
Net operating revenues		1,057,786			100.0	%		1,079,288			100.0	%
Operating costs and expenses:
Salaries and benefits		529,911			50.1	%		521,748			48.3	%
Supplies		127,934			12.1	%		127,797			11.8	%
Other operating expenses		321,037			30.4	%		327,648			30.5	%
Depreciation and amortization		42,706			4.0	%		62,620			5.8	%
Rent		24,254			2.3	%		25,094			2.3	%
Electronic health records incentives earned		(4,229	)		(0.4	)%		(8,455	)		(0.8	)%
Legal, professional and settlement costs		4,469			0.4	%		5,688			0.5	%
Impairment of long-lived assets and goodwill		16,200			1.5	%		250,400			23.2	%
Loss (gain) on sale of hospitals, net		(5,191	)		(0.5	)%		—			—	%
Transaction costs related to the Spin-off		31			—	%		4,912			0.5	%
Total operating costs and expenses		1,057,122			99.9	%		1,317,452			122.1	%
Income (loss) from operations		664			0.1	%		(238,164	)		(22.1	)%
Interest expense, net		57,988			5.5	%		56,728			5.2	%
Income (loss) before income taxes		(57,324	)		(5.4	)%		(294,892	)		(27.3	)%
Provision for (benefit from) income taxes		456			0.1	%		(46,239	)		(4.3	)%
Net income (loss)		(57,780	)		(5.5	)%		(248,653	)		(23.0	)%
Less: Net income (loss) attributable to noncontrolling interests		411			—	%		1,410			0.2	%
Net income (loss) attributable to Quorum Health Corporation	$	(58,191	)		(5.5	)%	$	(250,063	)		(23.2	)%

The following table reconciles Adjusted EBITDA, Adjusted EBITDA, Adjusted for Divestitures and Adjusted EBITDA, Adjusted for Potential Divestitures, to net income (loss), the most directly comparable U.S. GAAP financial measure (in thousands):

	Six Months Ended June 30,
	2017			2016
Net income (loss)	$	(57,780	)	$	(248,653	)
Interest expense, net		57,988			56,728
Provision for (benefit from) income taxes		456			(46,239	)
Depreciation and amortization		42,706			62,620
EBITDA		43,370			(175,544	)
Legal, professional and settlement costs		4,469			5,688
Impairment of long-lived assets and goodwill		16,200			250,400
Loss (gain) on sale of hospitals, net		(5,191	)		—
Transaction costs related to the Spin-off		31			4,912
Post-spin headcount reductions		1,693			—
Adjusted EBITDA		60,572			85,456
Negative EBITDA of divested hospitals		6,652			9,427
Adjusted EBITDA, Adjusted for Divestitures		67,224			94,883
Negative EBITDA (EBITDA) of potential divestitures		7,620			(2,948	)
Adjusted EBITDA, Adjusted for Potential Divestitures	$	74,844		$	91,935

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Revenues

The following table provides information related to our net operating revenues (dollars in thousands, except per adjusted admission amounts):

	Six Months Ended June 30,
	2017		2016		$ Variance			% Variance
Consolidated and combined:
Net patient revenues, before the provision for bad debts	$	1,123,865	$	1,158,238	$	(34,373	)		(3.0	)%
Provision for bad debts		115,374		133,359		(17,985	)		(13.5	)%
Total net patient revenues		1,008,491		1,024,879		(16,388	)		(1.6	)%
Non-patient revenues		49,295		54,409		(5,114	)		(9.4	)%
Total net operating revenues	$	1,057,786	$	1,079,288	$	(21,502	)		(2.0	)%
Net patient revenues per adjusted admission	$	8,964	$	8,631	$	333			3.9	%
Net operating revenues per adjusted admission	$	9,402	$	9,089	$	313			3.4	%
Same facility:
Net patient revenues, before the provision for bad debts	$	1,119,913	$	1,110,684	$	9,229			0.8	%
Provision for bad debts		114,725		118,929		(4,204	)		(3.5	)%
Total net patient revenues		1,005,188		991,755		13,433			1.4	%
Non-patient revenues		49,165		53,923		(4,758	)		(8.8	)%
Total net operating revenues	$	1,054,353	$	1,045,678	$	8,675			0.8	%
Net patient revenues per adjusted admission	$	8,994	$	8,828	$	166			1.9	%
Net operating revenues per adjusted admission	$	9,434	$	9,308	$	126			1.4	%

The following table provides information related to our net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Six Months Ended June 30,
	2017					2016					2017 v 2016
	$  Amount		% of Total			$  Amount		% of Total			$ Variance			bps Variance
Consolidated and combined:
Medicare	$	335,460		28.6	%	$	343,083		28.3	%	$	(7,623	)		0.3	%
Medicaid		204,010		17.4	%		216,351		17.8	%		(12,341	)		(0.4	)%
Managed care and commercial		470,005		40.0	%		474,879		39.2	%		(4,874	)		0.8	%
Self-pay		114,390		9.8	%		123,925		10.2	%		(9,535	)		(0.4	)%
Non-patient		49,295		4.2	%		54,409		4.5	%		(5,114	)		(0.3	)%
Total net operating revenues, before the provision for bad debts	$	1,173,160		100.0	%	$	1,212,647		100.0	%	$	(39,487	)
Same-facility:
Medicare	$	335,090		28.7	%	$	329,363		28.3	%	$	5,728			0.4	%
Medicaid		203,018		17.4	%		209,859		18.0	%		(6,841	)		(0.6	)%
Managed care and commercial		467,694		40.0	%		460,065		39.5	%		7,629			0.5	%
Self-pay		114,111		9.8	%		111,398		9.6	%		2,713			0.2	%
Non-patient		49,165		4.1	%		53,923		4.6	%		(4,758	)		(0.5	)%
Total net operating revenues, before the provision for bad debts	$	1,169,078		100.0	%	$	1,164,607		100.0	%	$	4,471

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The following table provides information related to certain drivers of our net operating revenues:

	Six Months Ended June 30,
	2017		2016		$ Variance			% Variance
Consolidated and combined:
Number of licensed beds at end of period		3,168		3,579		(411	)		(11.5	)%
Admissions		45,926		48,610		(2,684	)		(5.5	)%
Adjusted admissions		112,501		118,746		(6,245	)		(5.3	)%
Emergency room visits		340,514		367,235		(26,721	)		(7.3	)%
Medicare case mix index		1.41		1.37		0.04			2.9	%
Same-facility:
Number of licensed beds at end of period		3,168		3,168		—			—	%
Admissions		45,708		46,550		(842	)		(1.8	)%
Adjusted admissions		111,763		112,346		(583	)		(0.5	)%
Emergency room visits		338,464		345,973		(7,509	)		(2.2	)%
Medicare case mix index		1.40		1.38		0.02			1.4	%

Net operating revenues decreased $21.5 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016, consisting of a decrease of $16.4 million in net patient revenues and a $5.1 million decrease in non-patient revenues. Our net patient revenues, before the provision for bad debts, decreased $34.4 million, or 3.0%, consisting of a $45.2 million decline in the Divestitures Group, a $2.6 million decline in the Potential Divestitures Group and a $13.4 million increase in the Continuing Hospitals Group. Our net patient revenues, before the provision for bad debts, of the Continuing Hospitals Group does not include any revenues from the California HQAF program in the 2017 period due to the pending approval by CMS of the program for the 2017 – 2019 period. The six months ended June 30, 2016 included revenues of $22.3 million from this program. Excluding this item, net patient revenues of the Continuing Hospitals Group increased $35.7 million, consisting of $11.2 million from volumes and $24.5 million from payor rates. On a consolidated basis, admissions and adjusted admissions declined 5.5% and 5.3%, respectively, for the six months ended June 30, 2017 when compared to the same 2016 period. For the Continuing Hospitals Group, admissions increased 0.4% and adjusted admissions increased 1.4% for the six months ended June 30, 2017 when compared to the same 2016 period. Non-patient revenues decreased $5.1 million primarily related to our management advisory and consulting services business in the 2017 period.

Provision for Bad Debts

The provision for bad debts decreased $18.0 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to a $14.2 million decrease of the Divestitures Group and a $3.5 million reduction in the reserve for accounts aged greater than 365 days due to the improved collectability of those accounts.

Salaries and Benefits

The following table provides information related to our salaries and benefits expenses (dollars in thousands, except per adjusted admission amounts):

	Six Months Ended June 30,
	2017		2016		$ Variance			% Variance
Salaries and benefits	$	529,911	$	521,748	$	8,163			1.6	%
Hospital operations salaries and benefits	$	481,841	$	484,881	$	(3,040	)		(0.6	)%
Hospital operations salaries and benefits per adjusted admission	$	4,283	$	4,083	$	200			4.9	%
Hospital operations man-hours per adjusted admission		104.7		103.0		1.7			1.6	%

Salaries and benefits increased $8.2 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Salaries and benefits declined $17.7 million related to the Divestitures Group and $0.6 million related to the Potential Divestitures Group primarily resulting from decreased adjusted admissions of 4.1% for the six months ended June 30, 2017 when compared to the same 2016 period. These declines were offset by an increase of $15.3 million for the Continuing Hospitals Group primarily resulting from increased adjusted admissions of 1.4% for these same periods. The portion of our salaries and benefits expenses related to the corporate office was $20.0 million and $6.4 million in the six months ended June 30, 2017 and 2016, respectively, which included $5.3 million and $1.9 million of stock-based compensation for these respective periods. Prior to the Spin-off, management fees were allocated to QHC for corporate functions of CHS and were included in other operating expenses. The increase in corporate salaries and benefits as a result of the Spin-off was partially offset by a reduction in corporate and QHR salaries

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and benefits in the 2017 period when compared to the post-spin portion of the 2016 period due to headcount reductions in November 2016 and May 2017.

Supplies

The following table provides information related to our supplies expense (dollars in thousands, except per adjusted admissions amounts):

	Six Months Ended June 30,
	2017		2016		$ Variance		% Variance
Supplies	$	127,934	$	127,797	$	137		0.1	%
Supplies per adjusted admission	$	1,137	$	1,076	$	61		5.7	%

Supplies expense for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 was relatively flat. Supplies expense declined $3.7 million related to the Divestitures Group and $0.5 million related to the Potential Divestitures Group. Supplies expense of the Continuing Hospitals Group increased $4.4 million, primarily due to increases in implant costs and a decline in rebates and administrative fee reimbursements from the renegotiated contract with our group purchasing organization in connection with the Spin-off.

Other Operating Expenses

The following table provides information related to our other operating expenses (dollars in thousands):

	Six Months Ended June 30,
	2017		2016		$ Variance			% Variance
Purchased services	$	89,439	$	90,120	$	(681	)		(0.8	)%
Taxes and insurance		67,853		69,567		(1,714	)		(2.5	)%
Medical specialist fees		57,351		49,532		7,819			15.8	%
Transition services agreements and allocations from Parent		32,268		34,098		(1,830	)		(5.4	)%
Repairs and maintenance		21,202		21,966		(764	)		(3.5	)%
Utilities		13,392		14,156		(764	)		(5.4	)%
Management fees from Parent		—		11,792		(11,792	)		(100.0	)%
Other miscellaneous operating expenses		39,532		36,417		3,115			8.6	%
Total other operating expenses	$	321,037	$	327,648	$	(6,611	)		(2.0	)%

Other operating expenses decreased $6.6 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Other operating expenses declined $11.7 million as a result of the Divestitures Group and declined $5.4 million related to provider taxes included in the 2016 period with no comparable expense in the 2017 period related to the California HQAF program, which has not yet been approved by CMS. The remaining reduction in other operating expenses primarily related to corporate salaries and benefits being allocated as management fees from Parent in the portion of the 2016 period prior to the Spin-off. Offsetting these amounts, we had a $7.8 million increase in medical specialist fees primarily due to new contracts related to emergency room services and subsidies to various third parties, including hospitalists. We are disputing in arbitration certain charges under the transition services agreements with our former Parent.

Depreciation and Amortization

Depreciation and amortization expense decreased $19.9 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. This decrease was primarily due to the overall reduction in our long-lived assets due to divestitures, impairment charges reducing the asset bases of our long-lived assets and the discontinuation of depreciation and amortization related to long-lived assets upon being reclassified as held for sale.

Rent

Rent expense decreased $0.8 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. As a percentage of net operating revenues, rent expense was comparable for these periods.

Electronic Health Records Incentives Earned

Electronic health records incentives earned decreased $4.2 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 primarily due to the decrease in activity as we move closer toward full implementation of EHR. See Note 2 — Basis of Presentation and Significant Accounting Policies in the accompanying financial statements for additional information on EHR.

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Legal, Professional and Settlement Costs

Legal, professional and settlement costs decreased $1.2 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. These costs include legal costs and related settlements, if any, associated with regulatory claims, government investigations into reimbursement payments, claims associated with QHR contracts and costs for projects approved by the Board.

Impairment of Long-Lived Assets and Goodwill

We recognized $16.2 million of impairment to long-lived assets in the six months ended June 30, 2017. In the first quarter of 2017, we classified additional hospitals as held for sale. As part of this process, we evaluated the estimated relative fair value of all hospitals classified as held for sale in relation to the overall fair value of our hospital operations reporting unit utilizing a September 30, 2016 measurement date, which was the measurement date of our most recent annual goodwill impairment analysis, and recorded impairments of $1.1 million to property and equipment, $0.8 million to capitalized software costs and $1.4 million to goodwill. In the second quarter of 2017, we recognized $12.9 million of impairment to long-lived assets of certain hospitals which we have identified as potential divestiture candidates and for which we have received letters of intent.

We recognized impairment of $250.4 million to long-lived assets in the six months ended June 30, 2016, consisting of $41.0 million to property and equipment, $4.4 million to capitalized software assets and $205.0 million to goodwill, as discussed above.

Loss (Gain) on Sale of Hospitals, Net

We recognized a $5.2 million gain on the sale of hospitals, net in the six months ended June 30, 2017. This net gain primarily consisted of a $0.8 million gain on the sale of Cherokee in the first quarter of 2017 and a $5.0 million gain on the sale of Trinity in the second quarter of 2017. See Note 4 — Divestitures in the accompanying financial statements for additional information on divestitures.

Interest Expense, Net

The following table provides information related to interest expense, net (in thousands):

	Six Months Ended June 30,
	2017			2016		$ Variance			% Variance
Senior Credit Facility:
Revolving Credit Facility	$	331		$	85	$	246			289.4	%
Term Loan Facility		31,283			10,432		20,851			199.9	%
ABL Credit Facility		869			82		787			959.8	%
Senior Notes		23,255			8,914		14,341			160.9	%
Amortization of debt issuance costs and discounts		4,204			1,191		3,013			253.0	%
All other interest expense (income), net		(1,954	)		210		(2,164	)		(1,030.5	)%
Total interest expense, net, from long-term debt		57,988			20,914		37,074			177.3	%
Due to Parent, net		—			35,814		(35,814	)		(100.0	)%
Total interest expense, net	$	57,988		$	56,728	$	1,260			2.2	%

Interest expense, net increased $1.3 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Following the Spin-off, interest expense is calculated based on the terms of our credit agreements and senior notes. The effective interest rates for our Term Loan Facility and Senior Notes were approximately 8.8% and 12.5%, respectively, at June 30, 2017 and 7.6% and 12.5% at June 30, 2016, respectively. Our Senior Credit Facility was amended on April 11, 2017, which increased the interest rate terms on our Term Loan Facility. Additionally, for the portion of the 2016 period prior to the Spin-off, we were charged interest on the amounts due to CHS at various rates ranging from 4% to 7%. Interest computations on this indebtedness were based on the outstanding balance of Due to Parent, net at the end of each month. This debt with CHS was extinguished on April 29, 2016. See Liquidity and Capital Resources below and Note 7 – Long-Term Debt in the accompanying financial statements for additional information on our indebtedness.

Provision for (Benefit from) Income Taxes

The provision for income taxes was $0.5 million for the six months ended June 30, 2017 and the benefit from income taxes was $46.2 million for the six months ended June 30, 2016. Our effective tax rates were (0.8)% and 15.7% for these respective periods. The decrease in our effective tax rate for the six months ended June 30, 2017 when compared to the six months ended June 30, 2016 was primarily due to recording a valuation allowance against the deferred tax assets arising from our pre-tax loss in the 2017 period that are not more likely than not to be recognized.

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Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests was $0.4 million and $1.4 million in the six months ended June 30, 2017 and 2016, respectively. As a percentage of net operating revenues, it was relatively flat.

Three Months Ended June 30, 2017 Compared to Three Months Ended March 31, 2017

We have disclosed a comparison of our operating results on a sequential basis for the current quarter because we believe that this information is meaningful due to the divestitures in 2017 and the potential divestitures that we are able to target now that we are an independent company.

The following table provides a summary of our results of operations, both in dollars and as a percentage of net operating revenues (dollars in thousands):

	Three Months Ended
	June 30, 2017						March 31, 2017
				% of						% of
	$ Amount			Revenues			$ Amount			Revenues
Operating revenues, net of contractual allowances and discounts	$	585,215					$	587,945
Provision for bad debts		55,069						60,305
Net operating revenues		530,146			100.0	%		527,640			100.0	%
Operating costs and expenses:
Salaries and benefits		265,309			50.0	%		264,602			50.1	%
Supplies		64,112			12.1	%		63,822			12.1	%
Other operating expenses		157,613			29.8	%		163,424			31.1	%
Depreciation and amortization		20,586			3.9	%		22,120			4.2	%
Rent		12,152			2.3	%		12,102			2.3	%
Electronic health records incentives earned		(1,777	)		(0.3	)%		(2,452	)		(0.5	)%
Legal, professional and settlement costs		3,934			0.7	%		535			0.1	%
Impairment of long-lived assets and goodwill		12,900			2.4	%		3,300			0.6	%
Loss (gain) on sale of hospitals, net		(4,321	)		(0.8	)%		(870	)		(0.2	)%
Transaction costs related to the Spin-off		—			—	%		31			—	%
Total operating costs and expenses		530,508			100.1	%		526,614			99.8	%
Income (loss) from operations		(362	)		(0.1	)%		1,026			0.2	%
Interest expense, net		30,458			5.7	%		27,530			5.2	%
Income (loss) before income taxes		(30,820	)		(5.8	)%		(26,504	)		(5.0	)%
Provision for (benefit from) income taxes		(245	)		—	%		701			0.2	%
Net income (loss)		(30,575	)		(5.8	)%		(27,205	)		(5.2	)%
Less: Net income (loss) attributable to noncontrolling interests		55			—	%		356			—	%
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)		(5.8	)%	$	(27,561	)		(5.2	)%

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The following table reconciles Adjusted EBITDA, Adjusted EBITDA, Adjusted for Divestitures and Adjusted EBITDA, Adjusted for Potential Divestitures, to net income (loss), the most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended
	June 30, 2017			March 31, 2017
Net income (loss)	$	(30,575	)	$	(27,205	)
Interest expense, net		30,458			27,530
Provision for (benefit from) income taxes		(245	)		701
Depreciation and amortization		20,586			22,120
EBITDA		20,224			23,146
Legal, professional and settlement costs		3,934			535
Impairment of long-lived assets and goodwill		12,900			3,300
Loss (gain) on sale of hospitals, net		(4,321	)		(870	)
Transaction costs related to the Spin-off		—			31
Post-spin headcount reductions		1,693			—
Adjusted EBITDA		34,430			26,142
Negative EBITDA of divested hospitals		4,716			1,936
Adjusted EBITDA, Adjusted for Divestitures		39,146			28,078
Negative EBITDA of potential divestitures		1,762			5,858
Adjusted EBITDA, Adjusted for Potential Divestitures	$	40,908		$	33,936

Revenues

The following table provides information related to our net operating revenues (dollars in thousands, except per adjusted admission amounts):

	Three Months Ended
	June 30, 2017		March 31, 2017		$ Variance			% Variance
Consolidated:
Net patient revenues, before the provision for bad debts	$	561,266	$	562,599	$	(1,333	)		(0.2	)%
Provision for bad debts		55,069		60,305		(5,236	)		(8.7	)%
Total net patient revenues		506,197		502,294		3,903			0.8	%
Non-patient revenues		23,949		25,346		(1,397	)		(5.5	)%
Total net operating revenues	$	530,146	$	527,640	$	2,506			0.5	%
Net patient revenues per adjusted admission	$	9,099	$	8,834	$	265			3.0	%
Net operating revenues per adjusted admission	$	9,529	$	9,280	$	249			2.7	%
Same-facility:
Net patient revenues, before the provision for bad debts	$	561,538	$	558,375	$	3,163			0.6	%
Provision for bad debts		55,076		59,649		(4,573	)		(7.7	)%
Total net patient revenues		506,462		498,726		7,736			1.6	%
Non-patient revenues		23,930		25,235		(1,305	)		(5.2	)%
Total net operating revenues	$	530,392	$	523,961	$	6,431			1.2	%
Net patient revenues per adjusted admission	$	9,103	$	8,886	$	217			2.4	%
Net operating revenues per adjusted admission	$	9,534	$	9,335	$	199			2.1	%

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The following table provides information related to our net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Three Months Ended
	June 30, 2017					March 31, 2017					Second Quarter vs First Quarter
	$  Amount		% of Total			$  Amount		% of Total			$ Variance			bps Variance
Consolidated:
Medicare	$	160,167		27.4	%	$	175,293		29.8	%	$	(15,126	)		(2.4	)%
Medicaid		107,341		18.3	%		96,669		16.4	%		10,672			1.9	%
Managed care and commercial		238,448		40.7	%		231,557		39.4	%		6,891			1.3	%
Self-pay		55,310		9.5	%		59,080		10.0	%		(3,770	)		(0.5	)%
Non-patient		23,949		4.1	%		25,346		4.4	%		(1,397	)		(0.3	)%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	587,945		100.0	%	$	(2,730	)
Same-facility:
Medicare	$	161,633		27.6	%	$	173,457		29.7	%	$	(11,824	)		(2.1	)%
Medicaid		107,337		18.3	%		95,681		16.4	%		11,656			1.9	%
Managed care and commercial		237,367		40.6	%		230,327		39.5	%		7,040			1.1	%
Self-pay		55,201		9.4	%		58,910		10.1	%		(3,709	)		(0.7	)%
Non-patient		23,930		4.1	%		25,235		4.3	%		(1,305	)		(0.2	)%
Total net operating revenues, before the provision for bad debts	$	585,468		100.0	%	$	583,610		100.0	%	$	1,858

The following table provides information related to certain drivers of our net operating revenues:

	Three Months Ended
	June 30, 2017		March 31, 2017		Variance			% Variance
Consolidated:
Number of licensed beds at end of period		3,168		3,399		(231	)		(6.8	)%
Admissions		22,270		23,656		(1,386	)		(5.9	)%
Adjusted admissions		55,634		56,860		(1,226	)		(2.2	)%
Emergency room visits		167,575		172,939		(5,364	)		(3.1	)%
Medicare case mix index		1.43		1.39		0.04			2.9	%
Same-facility:
Number of licensed beds at end of period		3,168		3,168		—			—	%
Admissions		22,270		23,438		(1,168	)		(5.0	)%
Adjusted admissions		55,634		56,127		(493	)		(0.9	)%
Emergency room visits		167,575		170,889		(3,314	)		(1.9	)%
Medicare case mix index		1.41		1.39		0.02			1.4	%

Net operating revenues increased $2.5 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017, consisting of a $3.9 million increase in net patient revenues and a $1.4 million decrease in non-patient revenues. Our net patient revenues, before the provision for bad debts, decreased $1.3 million, or 0.2%, consisting of a $7.4 million decline in the Divestitures Group, a $3.0 million increase in the Potential Divestitures Group and a $3.1 million increase in the Continuing Hospitals Group. This increase in the Continuing Hospitals Group consisted of a $7.7 million favorable volume variance, partially offset by a $4.6 million unfavorable payor rate variance. On a consolidated basis, admissions and adjusted admissions declined 5.9% and 2.2%, respectively, for the three months ended June 30, 2017 when compared to the first quarter of 2017. For the Continuing Hospitals Group, admissions declined 2.7% and adjusted admissions increased 1.9% for the three months ended June 30, 2017 when compared to the first quarter of 2017.

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Provision for Bad Debts

The provision for bad debts decreased $5.2 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017, primarily due to a $3.5 million reduction in the reserve for accounts aged greater than 365 days due to the improved collectability of those accounts.

Salaries and Benefits

The following table provides information related to our salaries and benefits expenses (dollars in thousands):

	Three Months Ended
	June 30, 2017		March 31, 2017		$ Variance			% Variance
Salaries and benefits	$	265,309	$	264,602	$	707			0.3	%
Hospital operations salaries and benefits	$	240,459	$	241,382	$	(923	)		(0.4	)%
Hospital operations salaries and benefits per adjusted admission	$	4,322	$	4,245	$	77			1.8	%
Hospital operations man-hours per adjusted admission		105.6		103.7		2.0			1.9	%

Salaries and benefits increased $0.7 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017. Salaries and benefits declined $2.4 million related to the Divestitures Group and $2.6 million related to the Potential Divestitures Group primarily resulting from decreased adjusted admissions of 5.4% for the three months ended June 30, 2017 compared to the three months ended March 31, 2017. These declines were offset by an increase of $4.0 million related to the Continuing Hospitals Group primarily resulting from increased adjusted admissions of 1.9% for these same periods.

Supplies

The following table provides information related to our supplies expense (dollars in thousands, except per adjusted admission amounts):

	Three Months Ended
	June 30, 2017		March 31, 2017		$ Variance		% Variance
Supplies	$	64,112	$	63,822	$	290		0.5	%
Supplies per adjusted admission	$	1,152	$	1,122	$	30		2.7	%

Supplies expense for the three months ended June 30, 2017 compared to the three months ended March 31, 2017 was relatively flat. Supplies expense declined $0.6 million related to the Divestitures Group and $0.6 million related to the Potential Divestitures Group. Supplies expense of the Continuing Hospitals Group increased $1.5 million primarily due to an increase in implant costs.

Other Operating Expenses

The following table provides information related to our other operating expenses (dollars in thousands):

	Three Months Ended
	June 30, 2017		March 31, 2017		$ Variance			% Variance
Purchased services	$	43,843	$	45,596	$	(1,753	)		(3.8	)%
Taxes and insurance		33,610		34,243		(633	)		(1.8	)%
Medical specialist fees		28,888		28,463		425			1.5	%
Transition services agreements		15,986		16,282		(296	)		(1.8	)%
Repairs and maintenance		9,759		11,443		(1,684	)		(14.7	)%
Utilities		6,727		6,665		62			0.9	%
Other miscellaneous operating expenses		18,800		20,732		(1,932	)		(9.3	)%
Total other operating expenses	$	157,613	$	163,424	$	(5,811	)		(3.6	)%

Other operating expenses decreased $5.8 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017. The decline in other miscellaneous operating expenses related to a reduction in contract labor expenses.

Depreciation and Amortization

Depreciation and amortization expense decreased $1.5 million during the three months ended June 30, 2017 compared to the three months ended March 31, 2017. This decrease was primarily due to the Cherokee divestiture on March 31, 2017, the additional

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impairment charges recognized in the first quarter of 2017 and the discontinuation of depreciation and amortization related to the additional hospital assets reclassified as held for sale in the first quarter of 2017.

Rent

Rent expense for the three months ended June 30, 2017 compared to the three months ended March 31, 2017 was relatively flat. As a percentage of net operating revenues, rent expense was comparable for these periods.

Electronic Health Records Incentives Earned

Electronic health records incentives earned decreased $0.7 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017 primarily due to the decrease in activity as we move closer toward full implementation of EHR. See Note 2 — Basis of Presentation and Significant Accounting Policies in the accompanying financial statements for additional information on EHR.

Legal, Professional and Settlement Costs

Legal, professional and settlement costs increased $3.4 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017 primarily due to costs associated with certain QHR matters.

Impairment of Long-Lived Assets and Goodwill

We recognized $12.9 million of impairment to long-lived assets in the three months ended June 30, 2017 and $3.3 million of impairment in the three months ended March 31, 2017, as discussed above.

Loss (Gain) on Sale of Hospitals, Net

We recognized a $4.3 million gain on the sale of hospitals, net in the three months ended June 30, 2017. The net gain primarily related to the gain on the sale of Trinity in the second quarter of 2017. In the three months ended March 31, 2017, we recognized a $0.9 million gain on the sale of hospitals, net primarily related to the sale of Cherokee. See Note 4 — Divestitures in the accompanying financial statements for additional information on divestitures.

Interest Expense, Net

The following table provides information related to interest expense, net (in thousands):

	Three Months Ended
	June 30, 2017			March 31, 2017			$ Variance		% Variance
Senior Credit Facility:
Revolving Credit Facility	$	192		$	139		$	53		38.1	%
Term Loan Facility		16,642			14,641			2,001		13.7	%
ABL Credit Facility		613			256			357		139.5	%
Senior Notes		11,629			11,626			3		—	%
Amortization of debt issuance costs and discounts		2,224			1,980			244		12.3	%
All other interest expense (income), net		(842	)		(1,112	)		270		(24.3	)%
Total interest expense, net	$	30,458		$	27,530		$	2,928		10.6	%

Interest expense, net increased $2.9 million for the three months ended June 30, 2017 compared to the three months ended March 31, 2017. Our Term Loan Facility was amended on April 11, 2017, which increased the interest rate terms on our Term Loan Facility. As a result of the amendment, the effective interest rate for our Senior Credit Facility was 8.8% at June 30, 2017 compared to 7.7% at March 31, 2017. See Liquidity and Capital Resources below and Note 7 – Long-Term Debt in the accompanying financial statements for additional information on our indebtedness.

Provision for (Benefit from) Income Taxes

Benefit from income taxes was $0.2 million for the three months ended June 30, 2017 and the provision for income taxes was $0.7 million for the three months ended March 31, 2017. Our effective tax rates were 0.8% and (2.6)% for these respective periods. The increase in our effective tax rate for the three months ended June 30, 2017 when compared to the three months ended March 31, 2017 was primarily due to goodwill impairment recognized in the first quarter of 2017.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests was $0.1 million and $0.4 million in the three months ended June 30, 2017 and March 31, 2017, respectively. As a percentage of net operating revenues, it was relatively flat.

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Liquidity and Capital Resources

Financial Outlook

Our primary sources of liquidity are cash flows from operations, proceeds from divestitures and available borrowing capacity under our revolving credit facilities. We believe that these amounts will be adequate to service our existing debt and finance internal growth and fund capital expenditures over the next 12 months and into the foreseeable future. Borrowings under our revolving credit facilities are intended to be used for working capital and general corporate purposes.

Our business strategy includes an ongoing strategic review of our hospitals based upon analysis of financial performance, current competitive conditions, expected demographic trends, joint venture opportunities and capital allocation requirements. As part of this strategy, we are actively engaging in initiatives, among others, to divest underperforming hospitals, reduce our debt and refine our portfolio to a more sustainable group of hospitals with higher operating margins. We had proceeds of $13.7 million from the sale of two hospitals in December 2016, proceeds of $4.3 million from the sale of one hospital as of March 31, 2017 and proceeds of $15.9 million from the sale of one hospital as of June 30, 2017. We have targeted an additional ten hospitals that we intend to divest in the next twelve to fifteen months. For the six months ended June 30, 2017, we experienced net operating losses of $48.6 million from the twelve hospitals in this group operating in 2017.

Our financial statements have been prepared under the assumption that we will continue as a going concern. We have limited stand-alone operating history and have experienced net losses each quarter since the Spin-off. The net losses have been primarily due to impairment charges related to our hospital operations business, the negative impact of a fourth quarter of 2016 change in estimate related to the collectability of patient accounts receivable, higher than expected operating costs since the Spin-off associated with the transition services agreements with CHS and other third-party contracts in comparison to the allocated costs from CHS during the carve-out period prior to the Spin-off and due to the net operating losses from the group of hospitals that have been divested or are currently targeted by our management for divestiture.

On December 31, 2016, we adopted ASU No. 2014-15, Presentation of Financial Statements — Going Concern, which requires management to evaluate if there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern. As a result of adopting ASU No. 2014-15, management was required to evaluate our ability to comply with the Secured Net Leverage Ratio (as defined in the CS Agreement) under our Senior Credit Facility, as defined below, for one year following the issuance of the financial statements for the year ended December 31, 2016. Although we were in compliance with our financial covenants as of December 31, 2016, the new standard requires management to base its evaluation about our ability to continue to comply with those covenants on results and events considered “probable” of occurring considering historical results, implemented plans, and executed agreements as of the date the financial statements are issued. In light of (i) our historical net operating results; (ii) delays in the approval by CMS of the California HQAF program for the 2017 to 2019 program period, which impacts us due to our inability to recognize any earned revenues until CMS approval of the program has been issued; and (iii) the amount of net operating losses from hospitals we intend to divest, management sought and completed an amendment to certain provisions of our Senior Credit Facility.

On April 11, 2017, we executed the CS Amendment to, among other things, raise the maximum Secured Net Leverage Ratio, as defined in the CS Agreement, to 4.75x from 4.25x for the period July 1, 2017 to December 31, 2018 (which was previously 4.25x for the period July 1, 2017 to June 30, 2018), at which point it drops to 4.00x for the remainder of the agreement. The CS Amendment also provides for additional Consolidated EBITDA add backs under the covenant calculations for certain items. For additional details of the CS Amendment, see “—Long-Term Debt” below. Management concluded that the CS Amendment alleviated any substantial doubt about our ability to continue as a going concern for the one year period following the issuance of our financial statements for the six month period ended June 30, 2017 in this Quarterly Report on Form 10-Q. We are actively engaged in initiatives to divest underperforming hospitals and outpatient facilities, for which proceeds will be used to pay down the term loan under our credit facility.

Statements of Cash Flows

Our statement of cash flows for the three and six months ended June 30, 2017 when compared to the same 2016 periods, was significantly impacted by the completion of the Spin-off on April 29, 2016. Following the Spin-off, we own and manage our own cash depository and disbursement bank accounts and have borrowing capacity, as well as principal and interest obligations, under our new debt structure. Prior to the Spin-off, our cash activity was managed through Due to Parent, net under CHS’ cash management program and interest on our indebtedness with CHS was accumulated in the Due to Parent, liability.

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Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

The following table provides a summary of our cash flows (in thousands):

	Three Months Ended June 30,
	2017			2016			$ Variance
Net cash provided by (used in) operating activities	$	(27,481	)	$	36,796		$	(64,277	)
Net cash provided by (used in) investing activities		(3,601	)		(21,153	)		17,552
Net cash provided by (used in) financing activities		(36,055	)		38,506			(74,561	)
Net change in cash and cash equivalents	$	(67,137	)	$	54,149		$	(121,286	)

Net cash used in operating activities was $27.5 million for the three months ended June 30, 2017 compared to net cash provided by operating activities of $36.8 million for the three months ended June 30, 2016, a $64.3 million decrease. This decrease in cash flows from operating activities was primarily due to interest payments on our indebtedness. In the 2017 period, we made $50.5 million of interest payments on our Senior Credit Facility and Senior Notes, net of accruals of $29.2 million for additional interest expense and in the 2016 period, we accrued $19.3 million on this indebtedness, resulting in a $40.4 million decline in operating cash flows. In the 2016 period, we were not required to make any interest payments on this indebtedness prior to June 30, 2016. Interest payments on our indebtedness prior to the Spin-off were paid through Due to Parent, net, which is part of the financing activities portion of the cash flow statement. In addition, we had a one-time build up in accounts payable in the 2016 period, which increased operating cash flows approximately $20 million resulting from the timing of the Spin-off and start-up of processing accounts payable as a stand-alone company.

Net cash used in investing activities decreased $17.6 million to $3.6 million in the three months ended June 30, 2017 from $21.2 million in the three months ended June 30, 2016. This decrease was primarily attributable to $15.9 million of proceeds from hospital sales in the 2017 period with no comparable cash inflow in the 2016 period. Our expenditures for property and equipment increased $4.4 million primarily due to the ongoing construction of the patient tower and expanded surgical capacity at our Springfield, Oregon hospital. In addition, we acquired four ancillary outpatient businesses in the 2017 period and did not have any similar acquisitions in the 2016 period.

Net cash used in financing activities was $36.1 million for the three months ended June 30, 2017 compared to net cash provided by financing activities of $38.5 million in the three months ended June 30, 2017, a $74.6 million decrease. In the 2017 period, we utilized the proceeds from the sale of Cherokee to make a $4.3 million payment on our Term Loan Facility. We also repaid $28.0 million on our revolving credit facilities and incurred $2.9 million of debt issuance costs related to the April 11, 2017 amendment to our Senior Credit Facility. In the 2016 period, we completed the financing transactions related to the Spin-off which resulted in cash from borrowings of $1.3 billion, cash settlement of Due to Parent with CHS of $1.2 billion and cash outflow of $28.0 million for debt issuance costs. Additionally, we paid $2.2 million on the Term Loan Facility in the 2016 period. We had a net cash inflow of $31.7 million in the 2016 period related to transactions with CHS which were processed through Due to Parent, net with no comparable activity in the 2017 period.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

The following table provides a summary of our cash flows (in thousands):

	Six Months Ended June 30,
	2017			2016			$ Variance
Net cash provided by (used in) operating activities	$	(8,955	)	$	61,193		$	(70,148	)
Net cash provided by (used in) investing activities		(24,042	)		(35,609	)		11,567
Net cash provided by (used in) financing activities		29,947			28,455			1,492
Net change in cash and cash equivalents	$	(3,050	)	$	54,039		$	(57,089	)

Net cash used in operating activities was $9.0 million for the six months ended June 30, 2017 compared to net cash provided by operating activities of $61.2 million for the six months ended June 30, 2016, a $70.1 million decrease. This decrease in cash flows from operating activities was primarily due to interest payments on our indebtedness. In the 2017 period, we made $65.9 million of interest payments on our Senior Credit Facility and Senior Notes, net of accruals of $55.9 million for additional interest expense and in the 2016 period, we accrued $19.3 million on this indebtedness, resulting in a $29.3 million decline in operating cash flows. In the 2016 period, we were not required to make any interest payments on this indebtedness prior to June 30, 2016. Interest payments on our indebtedness with CHS prior to the Spin-off were paid through Due to Parent, net, which is part of the financing activities portion of the cash flow statement. The remaining decrease for the 2017 period when compared to the 2016 period generally related to increased operating costs in comparison to the allocated costs from CHS prior to the Spin-off.

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Net cash used in investing activities decreased $11.6 million to $24.0 million in the six months ended June 30, 2017 from $35.6 million in the six months ended June 30, 2016. This decrease was primarily attributable to $20.2 million of proceeds from hospital sales in the 2017 period with no comparable cash inflow in the 2016 period. Our expenditures for property and equipment increased $5.9 million primarily due to the ongoing construction of the patient tower and expanded surgical capacity at our Springfield, Oregon hospital. In addition, we incurred costs of $1.9 million to acquire four ancillary outpatient businesses in the 2017 period and did not have any similar acquisitions in the 2016 period. We had proceeds of $0.9 million in the 2016 period for asset sales outside of our divestitures activity, which is included in other investing activities in the cash flow statement.

Net cash provided by financing activities was $29.9 million and $28.5 million for the six months ended June 30, 2017 and 2016, respectively, a $1.5 million increase. In the 2017 period, we utilized proceeds from the sales of Cherokee and Barrow to make a $10.8 million of payments on our Term Loan Facility. We had net borrowings of $50.0 million on our revolving credit facilities and incurred $2.9 million of debt issuance costs related to the April 11, 2017 amendment to our Senior Credit Facility. In the 2016 period, we completed the financing transactions related to the Spin-off which resulted in cash from borrowings of $1.3 billion, cash settlement of Due to Parent with CHS of $1.2 billion and cash outflow of $28.0 million for debt issuance costs. Additionally, we paid $2.2 million on the Term Loan Facility in the 2016 period. We had a net cash inflow of $25.2 million related to transactions with CHS which were processed through Due to Parent, net with no comparable activity in the 2017 period.

Capital Expenditures

Capital expenditures for property, equipment and software were $39.1 million and $33.2 million for the six months ended June 30, 2017 and 2016, respectively. In addition, we had $6.6 million and $15.7 million of capital expenditures related to property and equipment accrued in accounts payable at June 30, 2017 and December 31, 2016, respectively. Capital expenditures during the six months ended June 30, 2017 and 2016 primarily related to the patient tower project, as described below, and to purchases of equipment and minor renovations at our hospitals and investments in information systems infrastructure. In the 2016 period, we also had costs related to furniture and fixtures for our corporate office.

We are building a new patient tower and expanding the surgical capacity at McKenzie – Willamette Medical Center, our hospital in Springfield, Oregon. We incurred costs of $12.8 million and $10.3 million during the three months ended June 30, 2017 and 2016, respectively, and costs of $24.5 million and $17.2 million during the six months ended June 30, 2017 and 2016, respectively, related to this project. As of June 30, 2017, we have incurred a total of $73.4 million of costs for this project. The total estimated cost for this project, including equipment costs, is estimated to be approximately $105 million. The project is expected to be completed in late 2018. As of June 30, 2017, we have no other material capital commitments.

Capital Resources

Our net working capital as of June 30, 2017 and December 31, 2016 was $300.4 million and $272.6 million, respectively. The $27.8 million increase was primarily due to the decrease in the current portion of long-term debt as a result of the pay down on the Term Loan Facility from hospital sales proceeds, the decrease in interest accrual from timing of payments on the Term Loan Facility and Senior Notes and due to a legal settlement related to QHR, net of insurance recoveries.

Long-Term Debt

The following table provides a summary of activity related to our long-term debt (in thousands):

	Six Months Ended June 30, 2017
	Total													Assets		Total
	Debt								Debt					Acquired		Debt
	at			Borrowings,					Issuance					Under		at
	Beginning			Excluding					Costs					Capital		End
	of Period			Discounts		Repayments			Payments			Amortization		Leases		of Period
Senior Credit Facility:
Revolving Credit Facility, maturing 2021	$	—		$	39,000	$	(39,000	)	$	—		$	—	$	—	$	—
Term Loan Facility, maturing 2022		868,419			—		(10,832	)		—			—		—		857,587
ABL Credit Facility, maturing 2021		—			263,000		(213,000	)		—			—		—		50,000
Senior Notes, maturing 2023		400,000			—		—			—			—		—		400,000
Unamortized debt issuance costs and discounts		(48,764	)		—		—			(2,938	)		4,204		—		(47,498	)
Capital lease obligations		25,588			—		(642	)		—			—		54		25,000
Other debt		1,582			72		(373	)		—			—		—		1,281
Total debt		1,246,825			302,072		(263,847	)		(2,938	)		4,204		54		1,286,370
Less:  Current maturities of long-term debt		(5,683	)														(1,649	)
Total long-term debt	$	1,241,142		$	302,072	$	(263,847	)	$	(2,938	)	$	4,204	$	54	$	1,284,721

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The following table provides a summary of our long-term debt, allocated between fixed and variable debt (dollars in thousands):

	June 30, 2017
	$ Amount		% of Total
Fixed	$	426,281		32.0	%
Variable		907,587		68.0	%
Total debt, excluding debt issuance costs and discounts	$	1,333,868		100.0	%

Senior Credit Facility

On April 29, 2016, we entered into a credit agreement, among us, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent. On April 11, 2017, we executed an agreement with our Senior Credit Facility lenders to amend certain provisions of our Senior Credit Facility, as described below.

The CS Agreement initially provided for an $880 million senior secured term loan facility and a $100 million senior secured revolving credit facility. The Term Loan Facility was issued at a discount of $17.6 million, or 98% of par value, and has a maturity date of April 29, 2022, subject to customary acceleration events and repayment, extension or refinancing. The Revolving Credit Facility has a maturity date of April 29, 2021, subject to certain customary acceleration events and repayment, extension or refinancing. The CS Amendment reduced the Revolving Credit Facility’s borrowing capacity from $100 million to $87.5 million until December 31, 2017, at which time the borrowing capacity decreases to $75.0 million.

The CS Agreement contains customary covenants, including a maximum permitted Secured Net Leverage Ratio, as determined based on 12 month trailing Consolidated EBITDA, as defined in the CS Agreement. As of June 30, 2017 and December 31, 2016, we had a Secured Net Leverage Ratio of 3.85 to 1.00 and 3.93 to 1.00, respectively, implying additional borrowing capacity of $154.6 million as of June 30, 2017. On April 11, 2017, we executed the CS Amendment with our Senior Credit Facility lenders to amend the calculation of the Secured Net Leverage Ratio beginning January 1, 2017 to December 31, 2018, among other provisions. The CS Amendment raised the maximum Secured Net Leverage Ratio required of us to remain in compliance, and also changed the calculation of compliance for specified periods.

After giving effect to the CS Amendment, the maximum Secured Net Leverage Ratio permitted under the CS Agreement, as determined based on 12 month trailing Consolidated EBITDA and as defined in the CS Agreement, follows:

	Maximum
	Secured Net
Period	Leverage Ratio
Period from January 1, 2017 to June 30, 2017	4.50 to 1.00
Period from July 1, 2017 to December 31, 2018	4.75 to 1.00
Period from January 1, 2019 and thereafter	4.00 to 1.00

In addition to amending the calculation of the Secured Net Leverage Ratio and the maximum Secured Net Leverage Ratio, the CS Amendment also affects other terms of the CS Agreement as follows:

• Through December 31, 2018, we are required to use asset sales proceeds to make mandatory redemptions under the Term Loan Facility. After December 31, 2018, we are required to use asset sale proceeds to make mandatory redemptions under the Term Loan Facility to the extent those proceeds are not expected to be reinvested within 15 months.

• Through December 31, 2018, we may request to exercise Incremental Term Loan Commitments, as defined in the CS Agreement, only if the Secured Net Leverage Ratio, adjusted for the requested Incremental Term Loan borrowing, is below 3.35 to 1.00. After December 31, 2018, we may request to exercise Incremental Term Loan Commitments for the greater of $100 million or an amount which would produce a Secured Net Leverage Ratio of 3.35 to 1.00.

• Through December 31, 2018, we are allowed to incur Permitted Additional Debt, as defined in the CS Agreement, as long as our Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 4.50 to 1.00. After December 31, 2018, we may incur Permitted Additional Debt, as long as our Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 5.50 to 1.00.

Prior to the CS Amendment, interest under the Term Loan Facility accrued, at our option, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 5.75%, or the alternate base rate plus 4.75%. Following the CS Amendment, interest under the Term Loan Facility accrues, at our option, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 6.75%, or the

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alternate base rate plus 5.75%. The effective interest rate on the Term Loan Facility was 8.79% as of June 30, 2017. Interest under the Revolving Credit Facility accrues, at our option, at adjusted LIBOR, subject to statutory reserves and a floor of 0% plus 2.75%, or the alternate base rate plus 1.75%, and remains unchanged under the CS Amendment.

As of June 30, 2017, we had no amounts outstanding on the Revolving Credit Facility. In addition, we had $10.3 million of letters of credit outstanding that were primarily related to the self-insured retention levels of professional and general liability and workers’ compensation liability insurance as security for the payment of claims. As of June 30, 2017, we had a borrowing capacity under our Revolving Credit Facility of $77.2 million.

ABL Credit Facility

On April 29, 2016, we entered into an ABL Credit Agreement (the “UBS Agreement,” and together with the CS Agreement, collectively, the “Credit Agreements”), among us, the lenders party thereto and UBS AG, Stamford Branch (“UBS”), as administrative agent and collateral agent. The UBS Agreement provides for a $125 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”). As of June 30, 2017, we had $50.0 million outstanding on the ABL Credit Facility and borrowing capacity of $75.0 million.

On April 11, 2017, we executed an amendment to the UBS Agreement with its lender party thereto, which aligned the provisions of the UBS Agreement with the CS Amendment. There were no changes to the USB Agreement that impacts our interest or covenant calculations associated with the ABL Credit Facility.

The ABL Credit Facility has a maturity date of April 29, 2021, subject to customary acceleration events and repayment, extension or refinancing. Interest under the ABL Credit Facility accrues, at our option, at a base rate or LIBOR, subject to statutory reserves and a floor of 0%, except that all swingline borrowings will accrue interest based on the base rate, plus an applicable margin determined by the average excess availability under the ABL Credit Facility for the fiscal quarter immediately preceding the date of determination. The applicable margin ranges from 1.75% to 2.25% for LIBOR advances and from 0.75% to 1.25% for base rate advances.

The ABL Credit Facility has a “Covenant Trigger Event” definition that requires us to maintain excess availability under the ABL Credit Facility equal to or greater than the greater of (i) $12.5 million and (ii) 10% of the aggregate commitments under the ABL Credit Facility. If a Covenant Trigger Event occurs, then we are required to maintain a minimum Consolidated Fixed Charge Ratio of 1.10 to 1.00 until such time that a Covenant Trigger Event is no longer continuing. In addition, if excess availability under the ABL Credit Facility were to fall below the greater of (i) 12.5% of the aggregate commitments under the ABL Credit Facility and (ii) $15.0 million, then a “Cash Dominion Event” would be triggered upon which the lenders could assume control of our cash.

Credit Agreement Covenants

In addition to the specific covenants described above, the Credit Agreements contain customary negative covenants, which limit our ability to, among other things, incur additional indebtedness, create liens, make investments, transfer assets and merge or acquire assets, and make restricted payments, including dividends and distributions, and specified payments on other indebtedness. They include customary events of default, including payment defaults, material breaches of representations and warranties, covenant defaults, default on other material indebtedness, customary Employee Retirement Income Security Act (“ERISA”)events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business. The Credit Agreements also contain customary affirmative covenants and representations and warranties.

Senior Notes

On April 22, 2016, we issued $400 million aggregate principal amount of 11.625% Senior Notes due 2023, pursuant to the Indenture. The Senior Notes were issued at a discount of $6.9 million, or 1.734%, in a private placement and are senior unsecured obligations guaranteed on a senior basis by certain of our subsidiaries (the “Guarantors”). The Senior Notes mature on April 15, 2023 and bear interest at a rate of 11.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016. Interest on the Senior Notes accrues from the date of original issuance and is calculated on the basis of a 360-day year comprised of twelve 30-day months. The effective interest rate on the Senior Notes was 12.48% as of June 30, 2017.

The Indenture contains covenants that, among other things, limit our ability and certain of our subsidiaries’ ability to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, create or incur certain liens, sell assets and subsidiary stock, transfer all or substantially all of our assets or enter into merger or consolidation transactions.

On May 17, 2017, we exchanged the 11.625% Senior Notes due 2023 (the “Initial Notes”) in the aggregate principal amount of $400 million, which are not registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of 11.625% Senior Notes due 2023 (the “Exchange Notes”), which have been registered under the Securities Act (the “Exchange Offer.” The Exchange Notes are substantially identical to the Initial Notes, except that the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Initial Notes.

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On and after April 15, 2019, we are entitled, at our option, to redeem all or a portion of the Senior Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices, plus accrued and unpaid interest, if any, to the redemption date. The redemption prices are expressed as a percentage of the principal amount on the redemption date. Holders of record on the relevant record date have the right to receive interest due on the relevant interest payment date. In addition, prior to April 15, 2019, we may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make whole” premium, as set forth in the Indenture. We are entitled to redeem up to 35% of the aggregate principal amount of the Senior Notes until April 15, 2019 with the net proceeds from certain equity offerings at the redemption price set forth in the Indenture.

The following table provides a summary of the redemption periods and prices related to the Senior Notes:

	Redemption
Period	Prices
Period from April 15, 2019 to April 14, 2020		108.719	%
Period from April 15, 2020 to April 14, 2021		105.813	%
Period from April 15, 2021 to April 14, 2022		102.906	%
Period from April 15, 2022 to April 14, 2023		100.000	%

Debt Issuance Costs and Discounts

The following table provides a summary of unamortized debt issuance costs and discounts follows (in thousands):

	June 30,			December 31,
	2017			2016
Debt issuance costs	$	32,084		$	29,146
Debt discounts		24,536			24,536
Total debt issuance costs and discounts		56,620			53,682
Less: Amortization of debt issuance costs and discounts		(9,122	)		(4,918	)
Total unamortized debt issuance costs and discounts	$	47,498		$	48,764

Capital Lease Obligations and Other Debt

Our debt from capital lease obligations primarily relates to our corporate office in Brentwood, Tennessee. As of June 30, 2017, this capital lease obligation was $18.3 million. The remainder of our capital lease obligations primarily relate to property and equipment at our hospitals and corporate office. Other debt consists of physician loans and miscellaneous notes payable to banks.

Debt Maturities

The following table provides a summary of our debt maturities for the next five years and thereafter (in thousands):

	June 30, 2017
Remainder of 2017	$	919
2018		7,820
2019		10,168
2020		10,251
2021		10,356
Thereafter		1,294,354
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868

Redeemable and Non-Redeemable Noncontrolling Interests

Our financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity of such entities in our accompanying financial statements. Certain of our consolidated subsidiaries have noncontrolling physician ownership interests with redemption features that require us to deliver cash upon the occurrence of certain events outside our control, such as the retirement, death, or disability of a physician-owner. We record the carrying amount of redeemable noncontrolling interests at the greater of: (1) the initial carrying amount increased or decreased for the noncontrolling interests' share of cumulative net income (loss), net of cumulative amounts

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distributed, if any, or (2) the redemption value. As of June 30, 2017, we had redeemable noncontrolling interests of $5.6 million and non-redeemable noncontrolling interests of $12.2 million.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk associated with changes in interest rates on our variable rate long-term debt. In connection with the Spin-off, on April 29, 2016, we entered into two credit agreements, the Senior Credit Facility and the ABL Credit Facility, that subject us to variable interest rates. As of June 30, 2017, we had outstanding principal amount of debt, excluding unamortized debt issuance costs and discounts, of $907.6 million which was subject to variable rates of interest. If the interest rate on our variable rate long-term debt outstanding as of June 30, 2017, after taking into consideration the 1% floor on our Term Loan Facility, was 100 basis points higher for the duration of a six-month period, the additional interest expense impacting net income (loss) would have been $(4.6) million, or $(0.15) per basic and diluted share. We do not currently have any derivative or hedging arrangements, or other known exposures, to changes in interest rates.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the participation of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluations, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective (at the reasonable assurance level) to ensure that the information required to be included in this report has been recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that the information required to be included in this report was accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2017 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to lawsuits and other legal matters arising in the ordinary course of our business, including claims of damages for personal injuries, medical malpractice, breach of hospital management contracts, breach of other contracts, wrongful restriction of or interference with physicians’ staffing privileges and other employment-related claims. In certain of these claims, plaintiffs request payment for damages, including punitive damages that may not be covered by our insurance policies.

Healthcare facilities are also subject to the regulation and oversight of various federal and state governmental agencies. The healthcare industry has seen numerous ongoing investigations related to compliance and billing practices and hospitals, in particular, continue to be the subject of governmental fraud and abuse programs and a primary enforcement target for the OIG and DOJ. From time to time, we detect issues of non-compliance with federal healthcare laws pertaining to claims submission and reimbursement payment practices or financial relationships with physicians. We avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of claims, and participation in voluntary disclosure protocols offered by CMS and the OIG. Participating in voluntary repayment of claims and voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action. Additionally, under the federal False Claims Act, private parties have the right to bring qui tam, or “whistleblower,” suits against healthcare facilities that submit false claims for payments to, or improperly retain overpayments from, governmental payors. Some states have adopted similar state whistleblower and false claims provisions. Qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits. As a result, they could lead to proceedings without our knowledge. Certain of our healthcare facilities have received, and from time to time other healthcare facilities may receive, inquiries or subpoenas from fiscal intermediaries or federal and state agencies. Any proceedings against us may involve potentially substantial settlement amounts, as well as the possibility of civil, criminal, or administrative fines, penalties or other sanctions which could be material. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements from the offending healthcare company. Depending on how the underlying conduct is interpreted by the inquiring or investigating federal or state agency, the resolution could have a material adverse effect on our results of operations, financial position and cash flows.

In connection with the Spin-off, CHS agreed to indemnify us for certain liabilities relating to outcomes or events occurring prior to the closing of the Spin-off, including (i) certain claims and proceedings known to be outstanding on or prior to the Spin-off and (ii) certain claims, proceedings and investigations by governmental authorities or private plaintiffs related to activities occurring at or related to our healthcare facilities prior to the closing date of the Spin-off , but only to the extent, in the case of clause (ii), that such claims are covered by insurance policies maintained by CHS, including professional and general liability and workers’ compensation liability. In this regard, CHS will continue to be responsible for certain Health Management Associates, Inc. legal matters covered by its contingent value rights agreement that relate to the portion of CHS’s business now held by us. Notwithstanding the foregoing, CHS is not indemnifying us in respect of any claims or proceedings arising out of, or related to, the business operations of QHR at any time or our compliance with the CIA with the OIG. Subsequent to the Spin-off, the OIG entered into an “Assumption of CIA Liability Letter” with us reiterating the applicability of the CIA to certain of our hospitals, although the OIG declined to enter into a separate agreement with us.

We do not control and cannot predict with certainty the progress or final outcome of discussions with government agencies, investigations and legal proceedings against us. Therefore, the final amounts paid to resolve such matters, claims and obligations could be material and could materially differ from amounts currently recorded, if any. Any such changes in our estimates or any adverse judgments could materially adversely impact our future results of operations, financial position and cash flows.

We have included a discussion of legal proceedings below, some, or all, of which may not be required to be disclosed in this Part II, Item 1 under SEC rules due to the nature of our business; however, we believe that the discussion of these open legal matters may provide useful information to security holders or other readers of this Quarterly Report on Form 10-Q. The proceedings discussed below do not include claims and lawsuits covered by professional and general liability or employment practices insurance and risk retention programs, none of which claims or lawsuits would in any event be required to be disclosed in this Part II, Item 1 under SEC rules. The legal matters referenced below are also discussed in Note 17 – Commitments and Contingencies to the accompanying consolidated and combined financial statements.

With respect to all legal, regulatory and governmental proceedings, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, we record an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and we are able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, we disclose the estimate of the amount of possible loss or range of loss. However, we are unable to estimate an amount of possible loss or range of loss in some instances based on the significant uncertainties involved in, or the preliminary nature of, certain legal, regulatory and governmental matters.

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Government Investigations

• Tooele, Utah – Physician Compensation. On May 5, 2016, our hospital in Tooele, Utah received a Civil Investigative Demand (“CID”) from the Office of the United States Attorney in Salt Lake City, Utah concerning allegations that the hospital and clinic corporation submitted or caused to be submitted false claims to the government for services referred by physicians with whom the hospital and clinic had inappropriate financial relationships, which allegedly violated federal law. The CID requested records and documentation concerning physician compensation. Because this matter remains at a preliminary stage, there are not sufficient facts available to assess what the outcome may be or to determine any estimate of the amount of loss or range of loss. We are fully cooperating with this investigation.

• Blue Island, Illinois – Patient Status. On October 9, 2015, our hospital in Blue Island, Illinois received a CID from the Office of the United States Attorney in Chicago, Illinois concerning allegations of upcoding observation and other outpatient services and improperly falsifying inpatient admission orders. The CID requested medical records and documentation concerning status change from observation to inpatient. We are unable to predict the outcome of this investigation. However, it is reasonably possible that we may incur a loss in connection with this investigation. We are unable to reasonably estimate the amount or range of such reasonably possible loss given that the investigation is still ongoing. Under some circumstances, losses incurred in connection with an adverse resolution in this investigation could be material. We are fully cooperating with this investigation.

Commercial Litigation and Other Lawsuits

• Arbitration with Community Health Systems, Inc. On August 4, 2017, we received a demand for arbitration from CHS seeking payment of certain amounts withheld by us pursuant to several transition services agreements. We contend that the amounts are not payable to CHS and were not properly billed by CHS under the agreements. . The matter is pending before the American Arbitration Association. CHS seeks payment of approximately $5.6 million relating to several of the transition services agreements. We intend to vigorously contest the charges as not payable to CHS under the transition services agreements and plan to make a counterclaim for additional elements of damages we believe we have suffered as a result of the transition services agreements. The matter is at a preliminary stage and we cannot assess the likelihood of a material adverse outcome at this time.

• Zwick Partners LP and Aparna Rao, Individually and On Behalf of All Others Similarly Situated v. Quorum Health Corporation, Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash, Thomas D. Miller and Michael J. Culotta. On September 9, 2016, a shareholder filed a purported class action in the United States District Court for the Middle District of Tennessee against QHC and certain of our officers. The Amended Complaint purports to be brought on behalf of a class consisting of all persons (other than defendants) who purchased or otherwise acquired securities of QHC between May 2, 2016 and August 10, 2016 and alleges that we and certain of our officers violated federal securities laws, including Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by making alleged false and/or misleading statements and failing to disclose certain information regarding aspects of our business, operations and compliance policies. On April 17, 2017, Plaintiff filed a Second Amended Complaint adding additional defendants, Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash. On June 23, 2017, we filed a motion to dismiss. We are vigorously defending ourselves in this matter. We are unable to predict the outcome of this matter. However, it is reasonably possible that we may incur a loss in connection with this matter. We are unable to reasonably estimate the amount or range of such reasonably possible loss because the motion to dismiss is still pending and discovery is stayed pending resolution of the motion to dismiss. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

• United Tort Claimants v. Quorum Health Resources, LLC (U.S. Bankruptcy Court for the District of New Mexico); Douthitt-Dugger, et al. v. Quorum Health Resources, LLC (Bernalillo County, New Mexico District Court). Plaintiffs in these cases underwent surgical procedures at Gerald Champion Regional Medical Center in New Mexico that they contend were experimental and performed by an unqualified doctor. Their lawsuits, originally filed on June 11, 2010, against the doctors, QHR and the hospital are pending in state court and in federal bankruptcy court in New Mexico. Subject to an adverse result in the insurance coverage litigation referenced below, in 2012, QHR resolved plaintiffs’ claims for QHR’s liability exceeding insurance limits, and for liability not covered by insurance, for $5.1 million through a settlement agreement. Litigation of plaintiffs’ claims against QHR has continued, and the trial of the claims of most of the plaintiffs is proceeding in phases in a bankruptcy court bench trial. During the liability phase, on December 23, 2016, the federal bankruptcy court in New Mexico ruled that QHR was 16.5% at fault for plaintiffs’ injuries. On June 19, 2017, a one-day bankruptcy court bench trial was held on an issue related to the enforceability of the prior settlement agreement, and no decision has been received to date. In addition, the final phase of the trial in federal bankruptcy court, to determine plaintiffs’ damages and QHR offsets, was tried July 24 through August 7, 2017, and no decision has been received to date. The United Tort Claimants (“UTC”) have made new and yet unproven allegations during trial that they contend warrant additional liability for QHR. QHR believes that the UTC’s contentions are without merit and are vigorously defending

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against them. The New Mexico state court has set March 8, 2018 as the trial date for plaintiffs’ claims against QHR. QHR’s insurer, Lexington Insurance Company, is providing a defense in these cases, subject to a reservation of rights. Lexington has sued QHR in Williamson County, Tennessee seeking a declaration that plaintiffs’ claims and the cost of defending QHR are not covered by Lexington. (Lexington Insurance Company v. Quorum Health Resources, LLC, et al. (Williamson County, Tennessee Chancery Court)). No trial date has been set for Lexington’s claim against QHR to nullify insurance coverage, which QHR also is vigorously defending. We have sought partial summary judgment on Lexington's claim for reimbursement of defense costs incurred in the UTC actions, and no decision has been received. We are unable to predict the outcome of this matter. However, it is reasonably possible that we may incur a loss in connection with this matter. We are unable to reasonably estimate the amount or range of such reasonably possible loss because the proceedings with respect to the merits of the New Mexico state court action, the availability and extent of insurance coverage and damages are not sufficiently advanced. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

Corporate Integrity Agreement

On August 4, 2014, CHS became subject to the terms of a five-year Corporate Integrity Agreement (“CIA”) with the OIG arising from a civil settlement with the U.S. Department of Justice, other federal agencies and identified relators that concluded previously announced investigations and litigation related to short stay admissions through emergency departments at certain of their affiliated hospitals. The OIG has required us to be bound by the same terms of the CHS CIA commencing on the date of the Spin-off and applying to us for the remainder of the five-year compliance term required of CHS, which terminates on August 4, 2019.

The compliance measures and reporting and auditing requirements contained in the CIA include:

• continuing the duties and activities of the Corporate Compliance Officer, Corporate Compliance Work Group, and Facility Compliance Officers and committees;

• maintaining a written Code of Conduct, which sets forth our commitment to full compliance with all statutes, regulations, and guidelines applicable to federal healthcare programs;

• maintaining written policies and procedures addressing matters included in our Compliance Program, including adherence to medical necessity and admissions standards for inpatient hospital stays;

• continuing general compliance training;

• providing specific training for employees and affiliates handling our billing, case management and clinical documentation;

• engaging an independent third party to perform an annual review of our compliance with the CIA;

• continuing the Confidential Disclosure Program and hotline to enable employees or others to disclose issues or questions regarding possible inappropriate policies or behavior;

• continuing the screening program to ensure that we do not hire or engage employees or contractors who are ineligible persons for federal healthcare programs;

• reporting any material deficiency which resulted in an overpayment to us by a federal healthcare program; and

• submitting annual reports to the OIG which describe in detail the operations of the Corporate Compliance Program.

A material, uncorrected violation of the CIA could lead to our suspension or disbarment from participation in Medicare, Medicaid and other federal and state healthcare programs. In addition, we are subject to possible civil penalties if we fail to substantially comply with the terms of the CIA, including stipulated penalties ranging from $1,000 to $2,500 per day. We are also subject to a stipulated penalty of $50,000 for each false certification made by us or any individual or entity on behalf of us in connection with reports required under the CIA. The CIA increases the amount of information QHC must provide to the federal government regarding our healthcare practices and our compliance with federal regulations. We believe that we are currently operating our business in compliance with the CIA and are unaware of any historical actions on our part that could represent a violation under the terms of the CIA.

Item 1A. Risk Factors

There have been no material changes to the risk factors discussed in the 2016 Annual Report on Form 10-K.

Item 6. Exhibits

The information required by this Item is set forth in the Index to Exhibits that follows the signatures page of this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

QUORUM HEALTH CORPORATION (Registrant)
By:	/s/ Thomas D. Miller
	Thomas D. Miller
	President, Chief Executive Officer
	and Director
	(principal executive officer)
By:	/s/ Michael J. Culotta
	Michael J. Culotta
	Executive Vice President and
	Chief Financial Officer
	(principal financial officer and principal accounting officer)
By:	/s/ Stanley E. Hunt
	Stanley E. Hunt
	Senior Vice President and Corporate Controller

Date: August 9, 2017

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Index to Exhibits

No.	Description
10.1	Amendment No. 1, dated as of April 11, 2017, to the Credit Agreement, dated as of April 29, 2016, by and among Quorum Health Corporation, the lenders party thereto, and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2017) (File No. 001-37500).
10.2	Amendment No. 1, dated as of April 11, 2017, to the ABL Credit Agreement, dated as of April 29, 2016, by and among Quorum Health Corporation, the lenders party thereto, and UBS AG, Stamford Branch, as Administrative Agent, Collateral Agent and Swingline Lender (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2017) (File No. 001-37500).
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	XBRL Taxonomy Extension Label Linkbase.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase.

* Filed herewith.

** Furnished herewith.

† Indicates a management contract or compensation plan or arrangement.

94

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Thomas D. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Quorum Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Thomas D. Miller

Thomas D. Miller

President, Chief Executive Officer

and Director

Date: August 9, 2017

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Michael J. Culotta, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Quorum Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Michael J. Culotta

Michael J. Culotta

Executive Vice President and

Chief Financial Officer

Date: August 9, 2017

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Quorum Health Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas D. Miller, President, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Thomas D. Miller

Thomas D. Miller

President, Chief Executive Officer

and Director

August 9, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Quorum Health Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Culotta, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Michael J. Culotta

Michael J. Culotta

Executive Vice President and

Chief Financial Officer

August 9, 2017

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 04, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	QUORUM HEALTH CORPORATION
Entity Central Index Key	0001650445
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Trading Symbol	QHC
Amendment Flag	false
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		30,297,524

XML

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Operating revenues, net of contractual allowances and discounts	$ 585,215	$ 598,163	$ 1,173,160	$ 1,212,647
Provision for bad debts	55,069	68,426	115,374	133,359
Net operating revenues	530,146	529,737	1,057,786	1,079,288
Operating costs and expenses:
Salaries and benefits	265,309	264,886	529,911	521,748
Supplies	64,112	64,136	127,934	127,797
Other operating expenses	157,613	163,185	321,037	327,648
Depreciation and amortization	20,586	31,463	42,706	62,620
Rent	12,152	12,545	24,254	25,094
Electronic health records incentives earned	(1,777)	(4,247)	(4,229)	(8,455)
Legal, professional and settlement costs	3,934	5,447	4,469	5,688
Impairment of long-lived assets and goodwill	12,900	250,400	16,200	250,400
Loss (gain) on sale of hospitals, net	(4,321)	0	(5,191)	0
Transaction costs related to the Spin-off	0	1,177	31	4,912
Total operating costs and expenses	530,508	788,992	1,057,122	1,317,452
Income (loss) from operations	(362)	(259,255)	664	(238,164)
Interest expense, net	30,458	29,276	57,988	56,728
Income (loss) before income taxes	(30,820)	(288,531)	(57,324)	(294,892)
Provision for (benefit from) income taxes	(245)	(44,565)	456	(46,239)
Net income (loss)	(30,575)	(243,966)	(57,780)	(248,653)
Less: Net income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Net income (loss) attributable to Quorum Health Corporation	$ (30,630)	$ (245,061)	$ (58,191)	$ (250,063)
Earnings (loss) per share attributable to Quorum Health Corporation stockholders:
Basic and diluted	$ (1.09)	$ (8.63)	$ (2.08)	$ (8.80)
Weighted-average shares outstanding:
Basic and diluted	28,145,215	28,412,720	27,977,738	28,412,389

XML

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ (30,575)	$ (243,966)	$ (57,780)	$ (248,653)
Amortization and recognition of unrecognized pension cost components, net of income taxes	120	(3,810)	242	(3,810)
Comprehensive income (loss)	(30,455)	(247,776)	(57,538)	(252,463)
Less: Comprehensive income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	$ (30,510)	$ (248,871)	$ (57,949)	$ (253,873)

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CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Apr. 29, 2016	Apr. 27, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 22,405	$ 89,542	$ 25,455	$ 55,145			$ 996	$ 1,106
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	409,217		380,685
Inventories	54,269		58,124
Prepaid expenses	27,641		23,028
Due from third-party payors	97,172		116,235
Current assets of hospitals held for sale	5,813		1,502
Other current assets	48,329		57,942
Total current assets	664,846		662,971
Property and equipment, at cost	1,436,407		1,519,975
Less: Accumulated depreciation and amortization	(724,929)		(786,075)
Total property and equipment, net	711,478		733,900
Goodwill	409,781		416,833
Intangible assets, net	77,694		84,982
Long-term assets of hospitals held for sale	14,381		6,851
Other long-term assets	109,321		88,833
Total assets	1,987,501		1,994,370
Current liabilities:
Current maturities of long-term debt	1,649		5,683
Accounts payable	170,862		169,684
Accrued liabilities:
Accrued salaries and benefits	94,381		98,803
Accrued interest	10,142		19,915
Due to third-party payors	38,881		42,537
Current liabilities of hospitals held for sale	1,391		492
Other current liabilities	47,163		53,268
Total current liabilities	364,469		390,382
Long-term debt	1,284,721		1,241,142		$ 1,250,497	$ 24,179
Deferred income tax liabilities, net	31,729		31,474
Other long-term liabilities	141,756		108,996
Total liabilities	1,822,675		1,771,994
Redeemable noncontrolling interests	5,614		6,807	8,360				8,958
Quorum Health Corporation stockholders' equity:
Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, none issued	0		0
Common stock, $0.0001 par value per share, 300,000,000 shares authorized; 30,297,524 shares issued and outstanding at June 30, 2017, and 29,482,050 shares issued and outstanding at December 31, 2016	3		3
Additional paid-in capital	541,774		537,911
Accumulated other comprehensive income (loss)	(2,518)		(2,760)
Accumulated deficit	(392,217)		(334,026)
Total Quorum Health Corporation stockholders' equity	147,042		201,128
Nonredeemable noncontrolling interests	12,170		14,441
Total equity	159,212		215,569	$ 293,651				$ 15,943
Total liabilities and equity	$ 1,987,501		$ 1,994,370

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CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Apr. 29, 2016
Statement Of Financial Position [Abstract]
Allowance for doubtful patient accounts	$ 340,197	$ 360,796
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	30,297,524	29,482,050
Common stock, shares outstanding	30,297,524	29,482,050	28,412,054

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CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Parent [Member]	Nonredeemable Noncontrolling Interests [Member]
Redeemable noncontrolling interests, beginning balance at Dec. 31, 2015	$ 8,958
Redeemable Noncontrolling Interests, Comprehensive income (loss)	(296)
Redeemable Noncontrolling Interests, Cash distributions to noncontrolling investors	(255)
Redeemable Noncontrolling Interests, Purchases of shares from noncontrolling investors	(31)
Redeemable Noncontrolling Interests, Adjustments to redemption values of redeemable noncontrolling interests investments	117
Redeemable Noncontrolling Interests, Noncontrolling interest in acquired entity	(133)
Redeemable noncontrolling interests, ending balance at Jun. 30, 2016	8,360
Stockholders' equity, beginning balance at Dec. 31, 2015	15,943					$ 3,184	$ 12,759
Comprehensive income (loss)	(252,167)			$ (3,810)	$ (234,951)	(15,112)	1,706
Transfers to Parent (prior to Spin-off)	15,112					15,112
Change in equity related to the Spin-off	515,384	$ 3	$ 518,518			(3,137)
Change in equity related to the spin-off, shares		28,412,054
Stock-based compensation expense	1,897		1,897
Stock-based compensation expense, shares		1,078,005
Cancellation of restricted stock awards for payroll tax withholdings on vested shares	(28)		(28)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares, shares		(812)
Cash distributions to noncontrolling investors	(2,392)						(2,392)
Purchases of shares from noncontrolling investors	19					19
Adjustments to redemption values of redeemable noncontrolling interests investments	(117)		(51)			$ (66)
Stockholders' equity, ending balance at Jun. 30, 2016	293,651	$ 3	520,336	(3,810)	(234,951)		12,073
Stockholders' equity, ending balance, shares at Jun. 30, 2016		29,489,247
Redeemable noncontrolling interests, beginning balance at Dec. 31, 2016	6,807
Redeemable Noncontrolling Interests, Comprehensive income (loss)	(1,127)
Redeemable Noncontrolling Interests, Cash distributions to noncontrolling investors	(42)
Redeemable Noncontrolling Interests, Adjustments to redemption values of redeemable noncontrolling interests investments	(24)
Redeemable noncontrolling interests, ending balance at Jun. 30, 2017	5,614
Stockholders' equity, beginning balance at Dec. 31, 2016	$ 215,569	$ 3	537,911	(2,760)	(334,026)		14,441
Stockholders' equity, beginning balance, shares at Dec. 31, 2016	29,482,050	29,482,050
Comprehensive income (loss)	$ (56,411)			242	(58,191)		1,538
Stock-based compensation expense	5,328		5,328
Stock-based compensation expense, shares		1,033,324
Cancellation of restricted stock awards for payroll tax withholdings on vested shares	(1,489)		(1,489)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares, shares		(217,850)
Cash distributions to noncontrolling investors	(3,809)						(3,809)
Adjustments to redemption values of redeemable noncontrolling interests investments	24		24
Stockholders' equity, ending balance at Jun. 30, 2017	$ 159,212	$ 3	$ 541,774	$ (2,518)	$ (392,217)		$ 12,170
Stockholders' equity, ending balance, shares at Jun. 30, 2017	30,297,524	30,297,524

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CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ (30,575)	$ (243,966)	$ (57,780)	$ (248,653)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	20,586	31,463	42,706	62,620
Non-cash interest expense	700	729	1,430	729
Provision for (benefit from) deferred income taxes	(346)	(47,451)	255	(47,451)
Stock-based compensation expense	2,531	1,897	5,328	1,897
Impairment of long-lived assets and goodwill	12,900	250,400	16,200	250,400
Loss (gain) on sale of hospitals, net	(4,321)	0	(5,191)	0
Changes in reserves for self-insurance claims, net of payments	7,042	8,901	11,254	16,891
Changes in reserves for legal, professional and settlement costs, net of payments	0	4,642	(3,651)	4,642
Other non-cash expense (income), net	47	(33)	5	(587)
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Patient accounts receivable, net	(13,186)	4,911	(30,349)	(7,211)
Due from and due to third-party payors, net	4,366	(6,538)	15,407	5,355
Inventories, prepaid expenses and other current assets	8,942	5,103	(7,732)	2,277
Accounts payable and accrued liabilities	(36,773)	36,072	1,292	29,129
Long-term assets and liabilities, net	606	(9,334)	1,871	(8,845)
Net cash provided by (used in) operating activities	(27,481)	36,796	(8,955)	61,193
Cash flows from investing activities:
Capital expenditures for property and equipment	(15,925)	(20,367)	(39,142)	(33,207)
Capital expenditures for software	(1,663)	(1,278)	(3,169)	(3,804)
Acquisitions, net of cash acquired	(1,887)	0	(1,887)	0
Proceeds from the sale of hospitals	15,874	0	20,156	0
Other investing activities	0	492	0	1,402
Net cash provided by (used in) investing activities	(3,601)	(21,153)	(24,042)	(35,609)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net	(28,000)	0	50,000	0
Borrowings of long-term debt	72	1,255,500	72	1,255,520
Repayments of long-term debt	(4,738)	(3,188)	(11,847)	(4,277)
Increase (decrease) in Due to Parent, net	0	31,669	0	25,183
Payments of debt issuance costs	(2,891)	(28,003)	(2,938)	(28,003)
Cash paid to Parent related to the Spin-off	0	(1,217,336)	0	(1,217,336)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares	(461)	27	(1,489)	27
Cash distributions to noncontrolling investors	(37)	(163)	(3,851)	(2,647)
Purchases of shares from noncontrolling investors	0	0	0	(12)
Net cash provided by (used in) financing activities	(36,055)	38,506	29,947	28,455
Net change in cash and cash equivalents	(67,137)	54,149	(3,050)	54,039
Cash and cash equivalents at beginning of period	89,542	996	25,455	1,106
Cash and cash equivalents at end of period	22,405	55,145	22,405	55,145
Supplemental cash flow information:
Interest payments, net	51,104	8,894	66,572	36,347
Income tax payments, net of refunds (after the Spin-off)	28	34	28	34
Non-cash purchases of property and equipment under capital lease obligations	$ 54	$ 3,097	$ 54	$ 5,120

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Description of the Business and Spin-Off

6 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of the Business and Spin-off

NOTE 1 – DESCRIPTION OF THE BUSINESS AND SPIN-OFF

Description of the Business

The principal business of Quorum Health Corporation, a Delaware corporation, and its subsidiaries (collectively, “QHC” or the “Company”) is to provide hospital and outpatient healthcare services in its markets across the United States. As of June 30, 2017, the Company owned or leased a diversified portfolio of 34 hospitals in rural and mid-sized markets, which are located in 16 states and have a total of 3,168 licensed beds. The Company provides outpatient healthcare services through its hospitals and affiliated facilities, including urgent care centers, diagnostic and imaging centers, physician clinics and surgery centers. The Company’s wholly-owned subsidiary, Quorum Health Resources, LLC (“QHR”), provides management advisory and healthcare consulting services to non-affiliated hospitals located throughout the United States. Over 95% of the Company’s net operating revenues are attributable to its hospital operations business.

Description of the Spin-off

On April 29, 2016, Community Health Systems, Inc. (“CHS”, or “Parent” when referring to the carve-out period prior to April 29, 2016) completed the spin-off of 38 hospitals, including their affiliated facilities, and QHR to form Quorum Health Corporation through the distribution of 100% of the common stock of QHC, issued at a par value of $0.0001 per share, to CHS stockholders of record as of the close of business on April 22, 2016 (the “Record Date”) and cash proceeds to CHS of $1.2 billion (the “Spin-off”). Each CHS stockholder received a distribution of one share of QHC common stock for every four shares of CHS common stock held as of the Record Date plus cash in lieu of fractional shares. Quorum Health Corporation began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “QHC” on May 2, 2016.

In connection with the Spin-off, QHC issued $400 million in aggregate principal amount of 11.625% Senior Notes due 2023 (the “Senior Notes”) on April 22, 2016, pursuant to an indenture (the “Indenture”) by and between the Company and Regions Bank, as Trustee. The Senior Notes were issued at a discount of $6.9 million, or 1.734%. The gross offering proceeds of the Senior Notes were deposited into a segregated escrow account at the closing of the offering on April 22, 2016. On April 29, 2016, the Company entered into a credit agreement (the “Senior Credit Facility”) consisting of an $880 million senior secured term loan facility (the “Term Loan Facility”), which was issued at a discount of $17.6 million, or 98% of par value, and a $100 million senior secured revolving credit facility (the “Revolving Credit Facility”). In addition, the Company entered into a $125 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”) on April 29, 2016. The net offering proceeds of the Senior Notes were released to QHC from the escrow account on April 29, 2016. The net offering proceeds of the Senior Notes, together with the net borrowings under the Term Loan Facility, were used to pay $1.2 billion of the cash proceeds to CHS, as mentioned above, and to pay the Company’s fees and expenses related to the Spin-off. The cash proceeds paid to CHS were characterized as a one-time, tax-free cash distribution.

In connection with the Spin-off, QHC and CHS entered into a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement on April 29, 2016, which, collectively, governed or continue to govern the allocation of employees, assets and liabilities that were transferred to QHC from CHS, including but not limited to investments, working capital, property and equipment, employee benefits and deferred tax assets and liabilities. In addition, QHC and CHS entered into various transition services agreements and other ancillary agreements that govern certain relationships and activities of QHC and CHS for five years following the Spin-off. See Note 16 — Related Party Transactions for additional information on the agreements that exist between QHC and CHS after the Spin-off.

In connection with the Spin-off, CHS contributed $530.6 million of additional paid-in capital to QHC and made a $13.5 million cash contribution to QHC, pursuant to the Separation and Distribution Agreement. This contribution consisted of $20.0 million of cash contributed to fund a portion of QHC’s initial working capital, reduced by $6.5 million for the difference in estimated and actual financing transaction fees related to the Spin-off.

The following table provides a summary of the major transactions to effect the Spin-off of QHC as a newly formed, independent company (dollars in thousands):

											Additional
	Long-Term			Due to			Common Stock				Paid-in			Parent's
	Debt			Parent, Net			Shares		Amount		Capital			Equity
Balance at April 29, 2016 (prior to the Spin-off)	$	24,179		$	1,813,836			—	$	—	$	—		$	3,137
Borrowings of long-term debt, net of debt issuance discounts		1,255,464			—			—		—		—			—
Payments of debt issuance costs		(29,146	)		—			—		—		—			—
Cash proceeds paid to Parent		—			(1,217,336	)		—		—		—			—
Transfer of liabilities from Parent		—			(22,292	)		—		—		—			—
Net deferred income tax liability resulting from the Spin-off		—			(46,783	)		—		—		—			—
Non-cash capital contribution from Parent		—			(527,425	)		—		—		530,562			(3,137	)
Distribution of common stock		—			—			27,719,645		3		(3	)		—
Distribution of restricted stock awards		—			—			692,409		—		—			—
Balance at April 29, 2016 (after the Spin-off)	$	1,250,497		$	—			28,412,054	$	3	$	530,559		$	—

The following table provides a summary of the liabilities transferred to QHC from CHS in connection with the Spin-off (in thousands):

	April 29, 2016
Accounts payable	$	13,607
Benefit plan liabilities		5,964
Other liabilities		2,721
Total liabilities transferred from Parent	$	22,292

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated and combined financial statements and accompanying notes of the Company presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). In the opinion of the Company’s management, the condensed consolidated and combined financial information presented herein includes all adjustments necessary to present fairly the results of operations, financial position and cash flows of the Company for the interim periods presented. Results of operations for interim periods should not be considered indicative of the results of operations expected for the full year ending December 31, 2017. Certain information and disclosures have been condensed or omitted as presented herein and as permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim period presentation. The Company’s management believes the financial statements and disclosures presented herein are adequate in order to make the information presented not misleading. The condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and accompanying notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2017 (the “2016 Form 10-K”).

Prior to its separation from CHS on April 29, 2016, QHC did not operate as a separate company and stand-alone financial statements were not historically prepared; however, QHC was comprised of certain stand-alone legal entities for which discrete financial information was available under CHS’ ownership. The accompanying condensed consolidated and combined financial statements include amounts and disclosures for QHC that have been derived from the consolidated financial statements and accounting records of CHS for the periods prior to the Spin-off in combination with the amounts and disclosures related to the stand-alone financial statements and accounting records of QHC after the Spin-off. The accompanying condensed consolidated and combined financial statements may not necessarily be indicative of the results of operations, financial position and cash flows of QHC in the future or those that would have occurred had the Company operated on a stand-alone basis during the entirety of the periods presented herein. See Note 16 — Related Party Transactions for additional information on the carve-out of financial information from CHS.

The Company’s financial statements have been prepared under the assumption that it will continue as a going concern. The Company has limited stand-alone operating history and has experienced net losses in each of the quarters subsequent to the Spin-off from CHS. On December 31, 2016, the Company adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements — Going Concern, which requires management to evaluate if there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern. As a result of adopting ASU No. 2014-15, management was required to evaluate the Company’s ability to comply with the Secured Net Leverage Ratio under its Senior Credit Facility for one year following the issuance of the financial statements for the six month period ended June 30, 2017. Although the Company was in compliance with its financial covenants as of June 30, 2017, the new standard requires management to base its evaluation about the ability to continue to comply with those covenants on results and events considered “probable” of occurring considering historical results, implemented plans, and executed agreements as of the date the financial statements are issued. In light of (i) the Company’s historical net operating results; (ii) delays in the approval by Centers for Medicare & Medicaid Services (“CMS”) of the California Hospital Quality Assurance Fee (“HQAF”) program for the 2017 to 2019 program period, which impacts the Company due to the inability to recognize any earned revenues until CMS approval of the program has been issued; and (iii) the amount of net operating losses from hospitals the Company intends to divest, management amended certain provisions of its Senior Credit Facility.

On April 11, 2017, the Company executed an agreement with its Senior Credit Facility lenders to amend certain provisions of its Senior Credit Facility (the “CS Amendment”) to, among other things, raise the maximum Secured Net Leverage Ratio (as defined in the credit agreement (the “CS Agreement”), among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent) to 4.75x from 4.25x for the period July 1, 2017 to December 31, 2018 (which was previously 4.25x for the period July 1, 2017 to June 30, 2018), at which point it drops to 4.00x for the remainder of the agreement. The CS Amendment also provides for additional Consolidated EBITDA add-backs under the covenant calculation for certain items. For additional information related to the CS Amendment, see Note 7 — Long-term Debt. Management has concluded that the CS Amendment alleviates any substantial doubt about its ability to continue as a going concern for the one year period following the issuance of its financial statements for the six month period ended June 30, 2017. The Company is actively engaged in initiatives to divest underperforming hospitals and outpatient facilities, for which proceeds will be used to pay down the Company’s term loan under its credit facility.

For all defined terms related to the Company’s Senior Credit Facility, see Note 7 – Long-term Debt.

Principles of Consolidation and Combination

The consolidated and combined financial statements include the accounts of the Company and its subsidiaries in which it holds either a direct or indirect ownership of a majority voting interest. Investments in less-than-wholly-owned consolidated subsidiaries of QHC are presented separately in the equity component of the consolidated and combined balance sheets to distinguish between the interests of QHC and the interests of the noncontrolling investors. Revenues and expenses from these subsidiaries are included in the respective individual line items of the Company’s consolidated and combined statements of income, and net income is presented both in total and separately to distinguish the amounts attributable to the Company and the amounts attributable to the interests of the noncontrolling investors. Noncontrolling interests that are redeemable, or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company, are presented in mezzanine equity in the consolidated and combined balance sheets.

Intercompany transactions and accounts of the Company are eliminated in consolidation. Additionally, all significant transactions with CHS that occurred prior to the Spin-off were included in the consolidated and combined balance sheets within Due to Parent, net. This liability to CHS was settled in the Spin-off.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

In the third quarter of 2016, the Company reclassified and separately presented certain items in its consolidated and combined statements of cash flows. Specifically, changes in self-insurance reserves related to employee health, professional and general liability and workers’ compensation liability were reclassified to changes in reserves for self-insurance claims, net of payments, and changes in reserves for legal, professional and settlement costs were reclassified to changes in reserves for legal, professional and settlement costs, net of payments. The Company believes the current presentation more accurately distinguishes the changes in these liabilities from changes in operating assets and liabilities considered to be part of its normal business operations. Both items are included in cash flows from operating activities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated and combined financial statements and accompanying notes. Actual results could differ from those estimates under different assumptions or conditions.

Revenues and Accounts Receivable

Revenue Recognition

The Company recognizes revenues from patient services at its hospitals and affiliated outpatient facilities in the period services are performed and reports these revenues at the net realizable amount expected to be collected from patients and third-party payors. Billings and collections are outsourced to CHS under the transition services agreements that were entered into in connection with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements.

The amounts collected for patient services are generally less than established billing rates, or standard billing charges, due to contractual agreements with third-party payors, governmental programs that require reduced billing rates, discounts offered as incentives for payment, and a portion related to bad debts. The Company recognizes revenues related to its QHR business when management advisory and consulting services are provided and reports these revenues at the net realizable amount expected to be collected from the non-affiliated hospital clients.

The following table provides a summary of the components of net operating revenues, before the provision for bad debts (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating revenues	$	3,023,793		$	3,042,786		$	6,092,116		$	6,123,439
Less: Contractual allowances		(2,336,287	)		(2,335,554	)		(4,707,578	)		(4,696,589	)
Less: Discounts		(102,291	)		(109,069	)		(211,378	)		(214,203	)
Total net operating revenues, before the provision for bad debts	$	585,215		$	598,163		$	1,173,160		$	1,212,647

Payor Sources

The primary sources of payment for patient healthcare services are third-party payors, including federal and state agencies administering the Medicare and Medicaid programs, other governmental agencies, managed care health plans, commercial insurance companies, workers’ compensation carriers and employers. Self-pay revenues are the portion of patient service revenues derived from patients who do not have health insurance coverage and the patient responsibility portion of services that are not covered by health insurance plans. Non-patient revenues primarily include revenues from QHR’s hospital management advisory and consulting services business, rental income and hospital cafeteria sales.

The following tables provide a summary of net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Three Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	160,167		27.4	%	$	167,549		28.0	%
Medicaid		107,341		18.3	%		113,283		18.9	%
Managed care and commercial plans		238,448		40.7	%		230,595		38.6	%
Self-pay		55,310		9.5	%		59,171		9.9	%
Non-patient		23,949		4.1	%		27,565		4.6	%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	598,163		100.0	%
	Six Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	335,460		28.6	%	$	343,083		28.3	%
Medicaid		204,010		17.4	%		216,351		17.8	%
Managed care and commercial plans		470,005		40.0	%		474,879		39.2	%
Self-pay		114,390		9.8	%		123,925		10.2	%
Non-patient		49,295		4.2	%		54,409		4.5	%
Total net operating revenues, before the provision for bad debts	$	1,173,160		100.0	%	$	1,212,647		100.0	%

Contractual Allowances and Discounts

The net realizable amount of patient service revenues due from third-party payors is subject to complexities and interpretations of payor-specific contractual agreements and governmental regulations that are frequently changing. The Medicare and Medicaid programs, which represent a large portion of the Company’s operating revenues, are highly complex programs to administer and are subject to interpretation of federal and state-specific reimbursement rates, new legislation and final cost report settlements. Contractual allowances, or differences in standard billing rates and the payments derived from contractual terms with governmental and non-governmental third–party payors, are recorded based on management’s best estimates in the period in which services are performed and a payment methodology is established with the patient. Recorded estimates for past contractual allowances are subject to change, in large part, due to ongoing contract negotiations and regulation changes, which are typical in the U.S. healthcare industry. Revisions to estimates are recorded as contractual allowance adjustments in the periods in which they become known and may be subject to further revisions. Self-pay and other payor discounts are incentives offered to uninsured or underinsured payors to reduce their costs of healthcare services with the purpose of maximizing the Company’s collection efforts.

Third-Party Program Reimbursements

Cost report settlements under reimbursement programs with Medicare, Medicaid and other managed care plans are estimated and recorded in the period the related services are performed and are adjusted in future periods, as needed, until the final cost report settlements are determined.Previous program reimbursements and final cost report settlements are included in due from and due to third-party payors in the consolidated and combined balance sheets. Previously, these amounts were a component of other current assets and other current liabilities in the consolidated and combined balance sheets. Contractual allowance adjustments related to previous program reimbursements and final cost report settlements favorably (unfavorably) impacted net operating revenues $1.4 million and $(2.5) million during the three months ended June 30, 2017 and 2016, respectively, and less than $(0.1) million and $(4.4) million during the six months ended June 30, 2017 and 2016, respectively.

Currently, several states utilize supplemental payment programs, including disproportionate share programs, for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from CMS and are funded with a combination of federal and state resources, including, in certain instances, taxes, fees or other program expenses (collectively, “provider taxes”) levied on the providers. Similar programs are also currently being considered by other states. These amounts are included in due from and due to third-party payors in the consolidated and combined balance sheets.

The following table provides a summary of the components of amounts due from and due to third-party payors (in thousands):

	June 30,		December 31,
	2017		2016
Amounts due from third-party payors:
Previous program reimbursements and final cost report settlements	$	22,182	$	23,876
State supplemental payment programs		74,990		92,359
Total amounts due from third-party payors	$	97,172	$	116,235
Amounts due to third-party payors:
Previous program reimbursements and final cost report settlements	$	31,535	$	33,366
State supplemental payment programs		7,346		9,171
Total amounts due to third-party payors	$	38,881	$	42,537

After a state supplemental payment program is approved and fully authorized by the appropriate state legislative or governmental agency, the Company recognizes revenue and related expenses based on the terms of the program in the period in which amounts are estimable and revenue collection is reasonably assured. The revenues earned by the Company under these programs are included in net operating revenues and the expenses associated with these programs are included in other operating expenses in the consolidated and combined statements of income.

The following table provides a summary of the portion of Medicaid reimbursements attributable to state supplemental payment programs (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Medicaid revenues	$	46,381	$	55,105	$	91,678	$	107,320
Provider taxes and other expenses		17,230		18,604		34,123		38,030
Reimbursements attributable to state supplemental payment programs, net of expenses	$	29,151	$	36,501	$	57,555	$	69,290

The California Department of Health Care Services implemented the HQAF program, imposing a fee on certain general and acute care California hospitals. Revenues generated from these fees provide funding for the non-federal supplemental payments to California hospitals that serve California’s Medi-Cal and uninsured patients. Under the most recent phase of the program, covering the period January 2014 through December 2016, the Company recognized $11.3 million of Medicaid revenues and $2.7 million of provider taxes for the three months ended June 30, 2016 and $22.3 million of Medicaid revenues and $5.4 million of provider taxes for the six months ended June 30, 2016. The current program expired on December 31, 2016 and CMS has not approved a new program. Consistent with the first four phases of the HQAF program, the Company is not recognizing revenues under the pending program in 2017 or thereafter until CMS completes the approval process.

Charity Care

In the ordinary course of business, the Company provides services to patients who are financially unable to pay for hospital care. The related charges for those patients who are financially unable to pay that otherwise do not qualify for reimbursement from a governmental program are classified as charity care. The Company determines amounts that qualify for charity care primarily based on the patient’s household income relative to the poverty level guidelines established by the federal government. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges are recorded in operating revenues at the standard billing rates and fully offset in contractual allowances in the same period. The gross amounts of charity care revenues were $7.5 million and $7.0 million for the three months ended June 30, 2017 and 2016, respectively, and $20.0 million and $14.8 million for the six months ended June 30, 2017 and 2016, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Substantially all of the Company’s receivables are related to providing healthcare services to patients at its hospitals and affiliated outpatient facilities.

The following table provides a summary of the components of patient accounts receivable, before contractual allowances, discounts and allowance for doubtful accounts (dollars in thousands):

	June 30, 2017					December 31, 2016
	$ Amount		% of Total			$ Amount		% of Total
Third-parties	$	2,119,455		77.3	%	$	1,930,103		74.6	%
Self-pay		621,630		22.7	%		656,373		25.4	%
Total patient accounts receivable, gross	$	2,741,085		100.0	%	$	2,586,476		100.0	%

Accounts receivable are reduced by an allowance for amounts that could become uncollectible in the future. The Company estimates the allowance for doubtful accounts by reserving a percentage of all self-pay accounts receivable without regard to aging category. The allowance percentage is based on a model that considers the historical write-off activity and is adjusted for expected recoveries and any anticipated changes in trends. The Company’s ability to estimate the allowance for doubtful accounts is not significantly impacted by the aging of accounts receivable, as management believes that substantially all of the risk exists at the point in time such accounts are identified as self-pay. For insured receivables, which are the non-self-pay receivables, the Company estimates the allowance for doubtful accounts based on a model that considers the uncontractualized portion of all accounts aging over 365 days from the date of patient discharge, reduced by an estimate for recoveries.

The following table provides a summary of the changes in the allowance for doubtful accounts (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	360,796
Provision for bad debts		115,374
Amounts written off, net of recoveries		(135,973	)
Balance at end of period	$	340,197

Collections are impacted by the economic ability of patients to pay, the effectiveness of CHS’ billing and collection efforts, including their current policies on collections, and the ability of the Company to further attempt collection efforts. Billings and collections are outsourced to CHS under the transition services agreements that were established with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements. Significant changes in payor mix, centralized business office operations, including the CHS shared service centers’ efforts in collecting the Company’s accounts receivable, economic conditions or trends in federal and state governmental healthcare coverage, among others, could affect the Company’s estimates of accounts receivable collectability. The Company also continually reviews its overall allowance adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues after the provision for bad debts, as well as by analyzing current period net operating revenues and admissions by payor classification, aged accounts receivable by payor, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables, and the impact of recent acquisitions and divestitures.

Concentration of Credit Risk

The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s hospitals and affiliated facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s markets and non-governmental third-party payors, Medicare represents a significant concentration of credit risk from payors. Accounts receivable, net of contractual allowances, from Medicare were $73.4 million and $72.6 million, or 9.8% and 9.8% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. Additionally, due to fiscal problems in the state of Illinois, the Company believes Illinois Medicaid represents a concentration of credit risk. The Company’s accounts receivable, net of contractual allowances, from Illinois Medicaid were $47.6 million and $34.8 million, or 6.4% and 4.7% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. The Company’s state supplemental program receivables from Illinois Medicaid were $18.1 million and $16.6 million, or 18.6% and 14.3% of total due from third-party payors, as of June 30, 2017 and December 31, 2016, respectively.

The Company’s revenues are particularly sensitive to regulatory and economic changes in certain states where the Company generates significant revenues. Accordingly, any changes in the current demographic, economic, competitive or regulatory conditions in certain states in which revenues are significant could have an adverse effect on the Company’s results of operations, financial condition or cash flows. Changes to Medicaid and other government-managed payor programs in these states, including reductions in reimbursement rates or delays in reimbursement payments under state supplemental payment or other programs, could also have a similar adverse effect.

The following table provides a summary of the states in which the Company generated more than 5% of total net patient revenues, before the provision for bad debts, as determined in each period (dollars in thousands):

	Number of	Six Months Ended June 30,
	Hospitals at	2017					2016
	June 30, 2017	$  Amount		% of Total			$  Amount		% of Total
Illinois	9	$	414,132		36.8	%	$	399,049		34.5	%
Oregon	1		106,514		9.5	%		104,810		9.0	%
Georgia	2		88,276		7.9	%		107,469		9.3	%
California	2		81,238		7.2	%		101,562		8.8	%
Kentucky	3		61,443		5.5	%		59,375		5.1	%

Other Operating Expenses

The following table provides a summary of the major components of other operating expenses (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Purchased services	$	43,843	$	44,636	$	89,439	$	90,120
Taxes and insurance		33,610		34,261		67,853		69,567
Medical specialist fees		28,888		25,182		57,351		49,532
Transition services agreements and allocations from Parent		15,986		17,841		32,268		34,098
Repairs and maintenance		9,759		10,730		21,202		21,966
Utilities		6,727		7,001		13,392		14,156
Management fees from Parent		—		2,966		—		11,792
Other miscellaneous operating expenses		18,800		20,568		39,532		36,417
Total other operating expenses	$	157,613	$	163,185	$	321,037	$	327,648

Following the Spin-off, the Company began recording costs associated with the transition services agreements and other ancillary agreements with CHS in accordance with the terms of these agreements. These costs, which primarily include the costs of providing information technology, patient billing and collections and payroll services, are included in “Transition services agreements and allocations from Parent” in the table above. Amounts allocated to the Company by CHS for periods prior to the Spin-off are also included in “Transition services agreements and allocations from Parent” in the table above.

Prior to the Spin-off, QHC recorded a monthly corporate management fee from CHS that represented a portion of CHS’ corporate office costs, and this fee was included in other operating expenses. Following the Spin-off, the costs for corporate office functions are primarily included in salaries and benefits expenses in the consolidated and combined statements of income.

See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

General and Administrative Costs

Substantially all of the Company’s operating costs and expenses are “cost of revenues” items. Operating expenses that could be classified as general and administrative by the Company are costs related to corporate office functions, including, but not limited to tax, treasury, audit, risk management, legal, investor relations and human resources. These costs are primarily salaries and benefits expenses associated with these corporate office functions. General and administrative costs of the Company were $14.5 million and $11.7 million during the three months ended June 30, 2017 and 2016, respectively, and $30.1 million and $23.7 million during the six months ended June 30, 2017 and 2016, respectively. Prior to the Spin-off, the majority of these costs were allocations from CHS. See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

Electronic Health Records Incentives Earned

Pursuant to the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the Company is eligible to receive incentive payments under the Medicare and Medicaid programs for its eligible hospitals and physician clinics that demonstrate meaningful use of certified Electronic Health Records (“EHR”) technology. Each of the Company’s eligible hospitals and physician clinics has completed the initial adoption phase of EHR implementation and is currently in the process of implementing the remaining two phases.EHR incentive payments are subject to audit and potential recoupment if it is determined that the applicable meaningful use standards were not met. EHR incentive payments are also subject to retrospective adjustment because the cost report data upon which the incentive payments are based are further subject to audit.

The Company utilizes a gain contingency model to recognize EHR incentive payments. When the recognition criteria have been fully met, the Company recognizes the income from EHR incentives payments as a part of operating costs and expenses in the consolidated and combined statements of income. Medicaid EHR incentive payments are calculated based on prior period Medicare cost report information available at the time when eligible hospitals demonstrate meaningful use of certified EHR technology. Medicare EHR incentive payments are calculated when eligible hospitals demonstrate meaningful use of certified EHR technology and the information for the applicable full Medicare cost report year used to determine the final incentive payment is available. In some instances, the Company may receive estimated Medicare EHR incentive payments prior to when the Medicare cost report information used to determine the final incentive payment is available. In these instances, recognition of the income from EHR incentive payments is deferred until all recognition criteria are met. The Company recognizes receivables for EHR incentive payments that have been earned, but are uncollected at period end, as other current assets in the consolidated and combined balance sheets. The receivables are adjusted for any known audit or retrospective adjustments related to prior periods. Deferred revenue from EHR incentive payments is recorded in other current liabilities in the consolidated and combined balance sheets.

The Company incurs both capital expenditures and operating expenses in connection with the implementation of EHR technology initiatives. The amounts and timing of these expenditures does not directly correlate with the timing of the Company’s receipt or recognition of EHR incentive payments as earned. As the Company completes its full implementation of certified EHR technology in accordance with all three phases of the program, its EHR incentive payments will decline and ultimately end.

The following table provides a summary of activity related to EHR incentives (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Electronic health records incentives receivable at beginning of period	$	5,578		$	5,885		$	4,189		$	11,227
Electronic health records incentives earned		1,777			608			4,229			4,816
Cash incentive payments received		(4,624	)		(5,124	)		(5,466	)		(12,749	)
Adjustments to receivable based on final cost report settlement or audit		(475	)		604			(696	)		(1,321	)
Electronic health records incentives receivable at end of period	$	2,256		$	1,973		$	2,256		$	1,973
Deferred revenue related to electronic health records incentives at beginning of period	$	—		$	(4,693	)	$	—		$	—
Cash received and deferred during period		(256	)		—			(256	)		(4,693	)
Recognition of deferred incentives as earned		—			3,639			—			3,639
Deferred revenue related to electronic health records incentives at end of period	$	(256	)	$	(1,054	)	$	(256	)	$	(1,054	)
Total electronic health records incentives earned during period	$	1,777		$	4,247		$	4,229		$	8,455
Total cash incentive payments received during period		4,880			5,124			5,722			17,442

Legal, Professional and Settlement Costs

Legal, professional and settlement costs in the consolidated and combined statements of income primarily include legal costs and related settlements, if any, related to regulatory claims, government investigations into reimbursement payments and claims associated with QHR’s hospital management contracts. Professional costs include legal costs for investigations, data gathering and analysis associated with investigation projects approved by the Company’s Board of Directors (the “Board”).

Loss (Gain) on Sale of Hospitals, Net

Loss (gain) on sale of hospitals, net is the loss (gain) related to the Company’s divestiture of hospitals and their related outpatient facilities. It is calculated as the difference between the cash received from the sale and the carrying value of the associated net assets at the date of sale, less certain incremental direct selling costs.

Transaction Costs Related to the Spin-off

Transaction costs related to the Spin-off consists of QHC’s portion of the costs to effect the Spin-off and the costs associated with forming a new company. These costs include audit, management advisory and consulting costs, investment advisory costs, legal expenses and other miscellaneous costs.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income. To the extent the Company believes that recovery is not likely, a valuation allowance is established. To the extent the Company establishes a valuation allowance or increases this allowance, the related expense is included in the provision for income taxes in the consolidated and combined statements of income. The Company classifies interest and penalties, if any, related to its tax positions as a component of income tax expense. See Note 11 — Income Taxes for information on the separate return method of accounting for income taxes that was used by the Company during the carve-out period.

Cash and Cash Equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments with a maturity of three months or less from the date acquired that are subject to an insignificant risk of change in value.

Inventories

Inventories, primarily consisting of medical supplies and drugs, are stated at the lower of cost or market on a first-in, first-out basis.

Other Current Assets

Other current assets consists of the current portion of the insurance receivables from CHS related to professional and general liability and workers’ compensation liability insurance reserves that were indemnified by CHS in connection with the Spin-off, non-patient accounts receivable primarily related to QHR, receivables related to electronic health records incentives and other miscellaneous current assets.

Property and Equipment

Purchases of property and equipment are recorded at cost. Property and equipment acquired in a business combination are recorded at estimated fair value. Routine maintenance and repairs are expensed as incurred. Expenditures that increase capacities or extend useful lives are capitalized. The Company capitalizes interest related to financing of major capital additions with the respective asset. Depreciation is recognized using the straight-line method over the estimated useful life of an asset. The Company depreciates land improvements over 3 to 20 years, buildings and improvements over 5 to 40 years, and equipment and fixtures over 3 to 18 years. The Company also leases certain facilities and equipment under capital lease obligations. These assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the asset. Property and equipment assets that are held for sale are not depreciated.

Goodwill

The Company’s hospital operations and QHR’s hospital management advisory and consulting services operations meet the criteria to be classified as reporting units for goodwill. Goodwill was initially determined for QHC’s hospital operations reporting unit based on a relative fair value approach as of September 30, 2013 (CHS’ goodwill impairment testing date). Additional goodwill was allocated on a similar basis for four hospitals acquired by CHS in 2014 and included in the group of hospitals spun-off to QHC. For the QHR reporting unit, goodwill was allocated based on the amount recorded by CHS at the time of its acquisition in 2007. All subsequent goodwill generated from hospital, physician practice or other ancillary business acquisitions is recorded at fair value at the time of acquisition.

Intangible Assets

The Company’s intangible assets primarily consist of purchase and development costs of software for internal use and contract-based intangible assets, including physician guarantee contracts, medical licenses, hospital management contracts, non-compete agreements and certificates of need. There are no expected residual values related to the Company’s intangible assets. Capitalized software costs are generally amortized over three years, except for software costs for significant system conversions, which are amortized over 8 to 10 years. Costs incurred to renew certain contract-based intangibles, such as hospital management contracts and certificates of need, would be recognized as intangible assets and amortized over the respective renewed contract periods. Capitalized software costs that are in the development stage are not amortized until the related projects are complete. Assets for physician guarantee contracts, hospital management contracts, non-compete agreements and certificates of need are amortized over the life of the individual contracts. Intangible assets held for sale are not amortized.

Impairment of Long-Lived Assets and Goodwill

Whenever an event occurs or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, the Company projects the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the carrying values are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimated fair value based on valuation techniques available in the circumstances.

Goodwill arising from business combinations is not amortized. Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. The fair value of the related reporting units is estimated using both a discounted cash flow model as well as a multiple model based on earnings before interest, taxes, depreciation and amortization. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s best estimate of a market participant’s weighted-average cost of capital. Both models are based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions of the Company.

See Note 3 — Impairment of Long-Lived Assets and Goodwill for additional information related to impairment charges recorded in the condensed consolidated and combined statements of income for the six months ended June 30, 2017 and the year ended December 31, 2016.

Other Long-Term Assets

Other long-term assets consists of the long-term portion of the receivables from CHS related to professional and general liability and workers’ compensation liability insurance reserves that were indemnified by CHS in connection with the Spin-off, as well as deferred compensation plan assets, deposits, investments in unconsolidated subsidiaries and other miscellaneous long-term assets.

Other Current Liabilities

Other current liabilities consists of the current portion of professional and general liability insurance reserves, including the portion indemnified by CHS in connection with the Spin-off, as well as property tax accruals, legal accruals, deferred revenue related to electronic health records incentives, physician guarantees and other miscellaneous current liabilities.

Professional and General Liability and Workers’ Compensation Liability Insurance Reserves

As part of the business of owning and operating hospitals, the Company is subject to legal actions alleging liability on its part. To mitigate a portion of this risk, the Company maintains insurance exceeding a self-insured retention level for these types of claims. The Company’s self-insurance reserves reflect the current estimate of all outstanding losses, including incurred but not reported losses, based on actuarial calculations as of period end. The loss estimates included in the actuarial calculations may change in the future based on updated facts and circumstances. The Company’s insurance expense includes the actuarially determined estimate of losses for the current year, including claims incurred but not reported, the change in the estimate of losses for prior years based upon actual claims development experience as compared to prior actuarial projections, the insurance premiums for losses in excess of the Company’s self-insured retention levels, the administrative costs of the insurance programs, and interest expense related to the discounted portion of the liability. The Company’s reserves for professional and general liability and workers’ compensation claims are based on semi-annual actuarial calculations, which are discounted to present value and consider historical claims data, demographic factors, severity factors and other actuarial assumptions. The reserves for self-insured claims are discounted based on the Company’s risk-free interest rate that corresponds to the period when the self-insured claims are incurred and projected to be paid.

See Note 17 — Commitments and Contingencies for information related to the portion of the Company’s insurance reserves for workers’ compensation liability and professional and general liability that are indemnified by CHS and the related accounting treatment and presentation in the consolidated and combined financial statements.

Self-Insured Employee Health Benefits

The Company is self-insured for substantially all of the medical benefits of its employees. The Company maintains a liability for its current estimate of incurred but not reported employee health claims based on historical claims data provided by third-party administrators. The undiscounted reserve for self-insured employee health benefits was $9.4 million and $11.0 million as of June 30, 2017 and December 31, 2016, respectively and is included in accrued salaries and benefits in the consolidated and combined balance sheets. Expense each period is based on the actual claims received during the period plus any adjustment to the liability.

Prior to the Spin-off, QHC was allocated employee health expense as part of the monthly corporate overhead charges from CHS. The allocation was determined based on claims made by QHC employees during the period plus an estimate for the change in liability related to QHC employee health claims incurred but not reported. The liability was included in Due to Parent, net in the consolidated and combined balance sheets, as the related employee health insurance policy was owned by CHS. Employee health expense is included in salaries and benefits expenses in the consolidated and combined statements of income for all periods. See Note 16 — Related Party Transactions for additional information on corporate overhead costs from CHS prior to the Spin-off.

Redeemable and Non-RedeemableNoncontrolling Interests

The Company’s consolidated and combined financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that it controls. Certain of the Company’s consolidated subsidiaries have noncontrolling physician ownership interests with redemption features that require the Company to deliver cash upon the occurrence of certain events outside its control, such as the retirement, death, or disability of a physician-owner. The carrying amount of redeemable noncontrolling interests is recorded in the consolidated and combined balance sheets at the greater of: (1) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of cumulative net income (loss), net of cumulative amounts distributed, if any, or (2) the redemption value.

Assets and Liabilities of Hospitals Held for Sale

The Company reports separately from other assets on the consolidated and combined balance sheet those assets that meet the criteria for classification as held for sale. Generally, assets that meet the criteria include those for which the carrying amount will be settled principally through a sale transaction rather than through continuing use. The asset must be available for immediate sale in its present condition, subject to usual or customary terms, and the sale must be probable to occur in the next 12 months. Similarly, the liabilities of a disposal group are classified as held for sale upon meeting these criteria. Immediately following classification as held for sale, the Company remeasures these assets and liabilities and adjusts the value to the lesser of the carrying amount or fair value less costs to sell. The assets and liabilities classified as held for sale are no longer depreciated or amortized into expense. The carrying value of assets classified as held for sale are reported net of impairment charges in the consolidated and combined balance sheets.

Stock-Based Compensation

In connection with the Spin-off, the Company issued QHC restricted stock awards to all CHS restricted stock award holders as of the Record Date. Each holder of CHS restricted stock awards received one QHC restricted stock award for every four CHS restricted stock awards held. In addition, QHC employees that held CHS restricted stock awards were allowed to continue to hold the CHS awards under the same terms and conditions that existed prior to the Spin-off, excluding certain shares granted on March 1, 2016 that were canceled in connection with the Spin-off. The unrecognized compensation expense related to the vesting of the CHS restricted stock awards held by QHC employees was transferred to QHC with the Spin-off. As a result, the Company is responsible for recording stock-based compensation expense attributable to the unvested portion of CHS restricted stock awards held by QHC employees and the unvested portion of all QHC restricted stock awards held by its employees, consisting of both QHC awards issued on the Record Date and additional awards granted under the Quorum Health Corporation 2016 Stock Award Plan (the “2016 Stock Award Plan”) following the Spin-off.

Following the Spin-off, the Company accounts for stock-based compensation in accordance with Accounting Standards Codification Topic 718, “Compensation — Stock Compensation.” Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service periods. Determining the fair value of stock-based awards at the grant date requires the exercise of judgment, including the number of stock-based awards that are expected to be forfeited. If actual forfeitures differ from the Company’s estimates, stock-based compensation expense and the Company’s results of operations would be impacted

See Note 14 — Stock-Based Compensation for additional information related to stock-based compensation.

Benefit Plans

Following the Spin-off, the Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, for which certain of the Company’s subsidiaries are the plan sponsors. The rights and obligations of these plans were transferred from CHS to the Company, pursuant to the Separation and Distribution Agreement. Prior to the Spin-off, QHC was allocated a portion of CHS’ benefit costs under its defined contribution plans. The allocation was based on specific identification for plans associated exclusively with QHC hospitals and on QHC’s proportional share of employees covered under all other applicable plans. The expense was recorded as salaries and benefits in the consolidated and combined statements of income, and the cumulative liability for these benefit costs, which was transferred to the Company in the Spin-off, was recorded in Due to Parent, net in the consolidated and combined balance sheets.

QHC recognizes the unfunded liability of its defined benefit plan in other long-term liabilities in the consolidated and combined balance sheets. Unrecognized gains (losses) and prior service credits (costs) are recorded as changes in other comprehensive income (loss). The measurement date of the plan’s assets and liabilities coincides with the Company’s year end. The Company’s pension benefit obligation is measured using actuarial calculations that incorporate discount rates, rate of compensation increases and expected long-term returns on plan assets. The calculations additionally consider expectations related to the retirement age and mortality of plan participants. The Company records pension benefit costs related to all of its plans as salaries and benefits expenses in the consolidated and combined statements of income.

Segment Reporting

The principal business of the Company is to provide healthcare services at its hospitals and outpatient facilities. The Company’s only other line of business is the hospital management advisory and consulting services it provides through QHR. The Company has determined that its hospital operations business meets the criteria for separate segment reporting. The financial information for QHR’s business does not meet the quantitative thresholds for separate segment reporting, and therefore has been combined with the Company’s corporate functions into the all other reportable segment. See Note 13 — Segments.

New Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Accounting for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. This ASU instead permits an entity to recognize goodwill impairment loss as the excess of a reporting unit’s carrying value over the estimated fair value of the reporting unit, to the extent this amount does not exceed the carrying amount of goodwill. The new guidance continues to allow an entity to perform a qualitative assessment over goodwill impairment indicators in lieu of a quantitative assessment in certain situations. The ASU is effective for the Company’s annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated and combined results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation, which was issued to simplify some of the accounting guidance for share-based compensation. Among the areas impacted by the amendments in this ASU are the accounting for income taxes related to share-based payments, accounting for forfeitures, classification of awards as equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this ASU on January 1, 2017. The adoption of this ASU had no material impact on the Company’s consolidated and combined results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the accounting for leases, requiring lessees to recognize most leases on their balance sheet with a right-of-use asset and a lease liability. Leases will be classified as either finance or operating leases, which will impact the expense recognition of such leases over the lease term. The ASU also modifies the lease classification criteria for lessors and eliminates some of the real estate leasing guidance previously applied for certain leasing transactions. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt this ASU on January 1, 2019. The Company utilizes a number of leases to support its operations. As such, the adoption of this ASU is expected to have a significant impact on the Company’s consolidated and combined financial position. The Company is currently evaluating the quantitative and qualitative impact the adoption of this ASU will have on its operations, policies and procedures. The Company is additionally evaluating any modifications to its leasing strategy in response to the requirements of this standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides for a single comprehensive principles-based model for the recognition of revenue across all industries using a five-step model to recognize revenue from customer contracts. The new standard significantly expands disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows as well as certain additional quantitative and qualitative disclosures. The standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016, and permits the use of either a full or modified retrospective approach upon adoption. In preparation for adoption of the ASU, the Company has established an implementation team that is evaluating the current impact the new standard will have on its revenue recognition policies, procedures, financial position, results of operations, cash flows, financial disclosures and control framework. Specifically, the Company is quantifying the impact on its results of operations, financial position and cash flows in order to determine which method, either full or modified retrospective, to use upon adoption. The Company is using a program management approach for the various revenue streams to accomplish the revenue, financial reporting and organizational impact analysis according to project milestones to ensure a systematic and timely process that will allow consideration of impact findings in the selection and implementation of a transition method. The Company cannot reasonably estimate at this time the quantitative impact that the adoption of this accounting standard will have on its consolidated financial statements. The Company notes that industry guidance continues to develop and that further guidance regarding third-party reimbursements and other reimbursement programs unique to the healthcare industry may be issued in later 2017, which may impact our evaluation. In addition to new and expanded disclosures, the Company anticipates that the most significant impact will be to the presentation of the income statement, as the provision for doubtful accounts will be recorded as a direct reduction to revenues and will not be presented as a separate line item.

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Impairment of Long-Lived Assets and Goodwill

6 Months Ended

Jun. 30, 2017

Disclosure Text Block Supplement [Abstract]

Impairment of Long-Lived Assets and Goodwill

NOTE 3 – IMPAIRMENT OF LONG-LIVED ASSETS AND GOODWILL

2017 Impairments

During the three months ended June 30, 2017, the Company evaluated the fair value of hospitals classified as held for sale and evaluated other hospitals for divestiture. In connection with this evaluation, the Company recognized $12.9 million of impairment to property and equipment during the three months ended June 30, 2017.

During the three months ended March 31, 2017, management made a decision to classify certain additional hospitals as held for sale. In connection with this decision, the Company evaluated the estimated relative fair value of the hospitals classified as held for sale in relation to the overall fair value of the hospital operations reporting unit utilizing a September 30, 2016 measurement date, which was the measurement date of the Company’s most recent annual goodwill impairment analysis. As a result, the Company recognized long-lived asset and goodwill impairment of $3.3 million during the three months ended March 31, 2017, which consisted of $1.1 million of property and equipment, $0.8 million of capitalized software costs and $1.4 million of goodwill impairment.

2016 Impairments

During the second quarter of 2016, management made a decision to classify certain hospitals as held for sale and evaluate other hospitals for divestiture. Due to the increase in net operating losses associated with these hospitals, the Company analyzed the long-lived assets of all of its hospitals to test for impairment and recorded $45.4 million of impairment related to long-lived assets in this quarter. In addition, the Company evaluated the estimated relative fair value of the hospitals classified as held for sale in relation to the overall fair value of the hospital operations reporting unit utilizing a September 30, 2015 measurement date, which was the measurement date of the Company’s most recent annual goodwill impairment analysis, and recognized $5.0 million of goodwill impairment in the second quarter of 2016. In this same quarter, management identified certain indicators of goodwill impairment related to the hospital operations reporting unit and concluded that such indicators necessitated an interim goodwill impairment evaluation. The primary indicators were declining market capitalization, as compared to the carrying value of equity, and a decrease in estimated future earnings of the hospital operations reporting unit. The Company performed a calculation of the overall fair value of this reporting unit in step one of the impairment test and concluded that the carrying value of the hospital operations reporting unit as of June 30, 2016 exceeded the estimated fair value. The Company performed a preliminary step two calculation of goodwill impairment to determine the implied fair value of goodwill of the hospital operations reporting unit in a hypothetical purchase price allocation. Based on this preliminary analysis, the Company estimated and recorded goodwill impairment of $200 million in the second quarter of 2016.

For step two goodwill impairment testing, the Company engaged a professional valuation firm to perform a hypothetical purchase price valuation of each of its hospitals utilizing a September 30, 2016 measurement date. The results of the third-party valuation, which was completed in the fourth quarter of 2016, indicated that the carrying values of certain of the Company’s individual hospitals exceeded their fair values. Considering these results to be an indicator of potential impairment and to assess whether any additional impairment of long-lived assets existed, the Company utilized a September 30, 2016 measurement date to perform an analysis of undiscounted cash flows for each hospital in which an indicator of impairment was identified. Based on the results of these analyses, the Company recorded impairment of $82.7 million related to long-lived assets at certain hospitals and a downward adjustment to its previously recorded goodwill estimate by $80 million in the fourth quarter of 2016. The net impact in the fourth quarter of 2016, in comparison to the $200 million estimate recorded as of June 30, 2016, was $2.7 million of additional impairment beyond this initial estimate.

In addition to the above, the Company experienced a decline in operating results at several hospitals in the fourth quarter of 2016. This led management to perform additional testing for impairment using a December 31, 2016 measurement date. As a result of this analysis, the Company recorded additional impairment of $38.8 million related to long-lived assets in the fourth quarter of 2016. The carrying values of long-lived assets, including those classified as held for sale, are reported net of these impairment charges on the consolidated and combined balance sheet as of December 31, 2016.

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Divestitures

6 Months Ended

Jun. 30, 2017

Discontinued Operations And Disposal Groups [Abstract]

Divestitures

NOTE 4 –DIVESTITURES

Trinity Hospital of Augusta

On June 30, 2017, the Company sold 231-bed Trinity Hospital of Augusta, and its affiliated outpatient facilities (“Trinity”), located in Augusta, Georgia, for $15.9 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $5.0 million and $3.6 million, respectively, related to Trinity, and pre-tax losses of $7.4 million and $5.9 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $5.0 million gain on the sale in the three months ended June 30, 2017. The Company also recorded $33.9 million of impairment to property, equipment and capitalized software costs of Trinity during the year ended December 31, 2016.

Sunbury Community Hospital and Lock Haven Hospital

On June 7, 2017, the Company announced that it had entered into a definitive agreement to sell 70-bed Sunbury Community Hospital, located in Sunbury Pennsylvania, and 47-bed Lock Haven Hospital, located in Lock Haven, Pennsylvania. The definitive agreement covers both hospitals and their affiliated outpatient facilities. The Company currently anticipates completing the sale of these hospitals in the third quarter of 2017.

McKenzie Regional Hospital and Henderson County Hospital

On May 12, 2017, the Company announced that it had entered into a definitive agreement to sell 45-bed McKenzie Regional Hospital, located in McKenzie, Tennessee, and 45-bed Henderson County Community Hospital, located in Lexington, Tennessee. The definitive agreement covers both hospitals and their affiliated outpatient facilities. The Company currently anticipates completing the sale of these hospitals in the third quarter of 2017.

Cherokee Medical Center

On March 31, 2017, the Company sold 60-bed Cherokee Medical Center and its affiliated outpatient facilities (“Cherokee”), located in Centre, Alabama, for $4.3 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $0.1 million and $1.0 million, respectively, related to Cherokee, and pre-tax losses of $1.0 million and $2.7 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $0.3 million gain on the sale in the six months ended June 30, 2017. The Company also recorded $3.9 million and $2.0 million of impairment to property, equipment and capitalized software costs of Cherokee during the years ended December 31, 2016 and 2015, respectively.

Barrow Regional Medical Center

Effective December 31, 2016, the Company sold 56-bed Barrow Regional Medical Center and its affiliated outpatient facilities (“Barrow”), located in Winder, Georgia, for $6.6 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included pre-tax losses of $1.6 million and $2.3 million, respectively, related to Barrow and pre-tax losses of $1.0 million and $5.3 million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $1.2 million loss on the sale and $4.0 million of impairment to property, equipment and capitalized software costs of Barrow during the year ended December 31, 2016.

Sandhills Regional Medical Center

Effective December 1, 2016, the Company sold 64-bed Sandhills Regional Medical Center and its affiliated outpatient facilities (“Sandhills”), located in Hamlet, North Carolina, for $7.2 million. For the three months ended June 30, 2017 and 2016, the Company’s operating results included a pre-tax gain (loss) of $1.1 million and $(0.8) million, respectively, related to Sandhills, and $0.4 million and $(1.4) million for the six months ended June 30, 2017 and 2016, respectively. In addition to the above, the Company recorded a $1.0 million loss on the sale and $4.8 million of impairment to property, equipment and capitalized software costs of Sandhills during the year ended December 31, 2016.

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Property and Equipment

6 Months Ended

Jun. 30, 2017

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 5 – PROPERTY AND EQUIPMENT

The following table provides a summary of the components of property and equipment (in thousands):

	June 30,			December 31,
	2017			2016
Property and equipment, at cost:
Land and improvements	$	76,830		$	84,474
Building and improvements		750,697			782,892
Equipment and fixtures		530,652			592,463
Construction in progress		78,228			60,146
Total property and equipment, at cost		1,436,407			1,519,975
Less: Accumulated depreciation and amortization		(724,929	)		(786,075	)
Total property and equipment, net	$	711,478		$	733,900

Depreciation expense was $14.8 million and $22.5 million for the three months ended June 30, 2017 and 2016, respectively and $30.5 million and $44.9 million for the six months ended June 30, 2017 and 2016, respectively. See Note 6— Goodwill and Intangible Assets for a table on amortization expense, which includes amortization of leasehold improvement assets and property and equipment held under capital lease obligations. The total amount of assets held under capital lease obligations, at cost, was $29.2 million and $30.2 million at June 30, 2017 and December 31, 2016, respectively, and $26.5 million and $27.5 million, net of accumulated amortization, at June 30, 2017 and December 31, 2016, respectively.

Purchases of property and equipment accrued in accounts payable were $6.6 million and $15.7 million as of June 30, 2017 and December 31, 2016, respectively.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 6 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table provides a summary of changes in goodwill (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	416,833
Acquisitions		1,202
Divestitures		(4,554	)
Reclassification to held-for-sale		(2,332	)
Impairment		(1,368	)
Balance at end of period	$	409,781

Goodwill related to the hospital operations reporting unit was $376.5 million and $383.5 million as of June 30, 2017 and December 31, 2016, respectively. Goodwill related to the hospital management advisory and consulting services reporting unit was $33.3 million at both June 30, 2017 and December 31, 2016. Goodwill related to divestitures related to the sale of Trinity.  See Note 4— Divestitures for a discussion of the divestiture of the goodwill that was written-off as part of the sale of Trinity.

See Note 3— Impairment of Long-Lived Assets and Goodwill for a discussion of the goodwill impairment charges recorded by the Company in 2017 and 2016.

Intangible Assets

The following table provides a summary of intangible assets (in thousands):

	June 30,			December 31,
	2017			2016
Finite-lived intangible assets:
Capitalized software costs:
Cost	$	165,113		$	180,855
Accumulated amortization		(106,811	)		(118,391	)
Capitalized software costs, net		58,302			62,464
Physician guarantee contracts:
Cost		7,990			11,355
Accumulated amortization		(4,457	)		(6,329	)
Physician guarantee contracts, net		3,533			5,026
Other finite-lived intangible assets:
Cost		43,883			44,342
Accumulated amortization		(33,707	)		(33,059	)
Other finite-lived intangible assets, net		10,176			11,283
Total finite-lived intangible assets
Cost		216,986			236,552
Accumulated amortization		(144,975	)		(157,779	)
Total finite-lived intangible assets, net	$	72,011		$	78,773
Indefinite-lived intangible assets:
Tradenames	$	4,000		$	4,000
Medical licenses and other indefinite-lived intangible assets		1,683			2,209
Total indefinite-lived intangible assets	$	5,683		$	6,209
Total intangible assets:
Cost	$	222,669		$	242,761
Accumulated amortization		(144,975	)		(157,779	)
Total intangible assets, net	$	77,694		$	84,982

As of June 30, 2017, the Company had $3.4 million of capitalized software costs that are currently in the development stage. Amortization of these capitalized costs will begin once the software projects are complete and ready for their intended use.

See Note 3— Impairment of Long-Lived Assets and Goodwill for a discussion of the intangible asset impairment charges recorded by the Company in 2017 and 2016.

Amortization Expense

The following table provides a summary of the components of amortization expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Amortization of finite-lived intangible assets:
Capitalized software costs	$	3,796	$	6,730	$	8,539	$	13,325
Physician guarantee contracts		599		902		1,156		1,613
Other finite-lived intangible assets		556		759		1,126		1,516
Total amortization expense related to finite-lived intangible assets		4,951		8,391		10,821		16,454
Amortization of leasehold improvements and property and equipment assets held under capital lease obligations		882		610		1,338		1,293
Total amortization expense	$	5,833	$	9,001	$	12,159	$	17,747

As of June 30, 2017, the weighted-average remaining amortization period of the Company’s intangible assets subject to amortization, except for capitalized software costs and physician guarantee contracts, was approximately 5.0 years.

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Long-Term Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 7 – LONG-TERM DEBT

The following table provides a summary of the components of long-term debt (in thousands):

	June 30,			December 31,
	2017			2016
Senior Credit Facility:
Revolving Credit Facility, maturing 2021	$	—		$	—
Term Loan Facility, maturing 2022		857,587			868,419
ABL Credit Facility, maturing 2021		50,000			—
Senior Notes, maturing 2023		400,000			400,000
Unamortized debt issuance costs and discounts		(47,498	)		(48,764	)
Capital lease obligations		25,000			25,588
Other debt		1,281			1,582
Total debt		1,286,370			1,246,825
Less:  Current maturities of long-term debt		(1,649	)		(5,683	)
Total long-term debt	$	1,284,721		$	1,241,142

In connection with the Spin-off, the Company entered into two credit agreements and issued senior notes. In addition, the previous indebtedness with CHS, which was classified on the consolidated and combined balance sheets as Due to Parent, net was fully settled. See Note 1 — Description of the Business and Spin-off and Note 16 — Related Party Transactions for additional information on the use of proceeds from the new debt instruments and the settlement of Due to Parent, net.

Senior Credit Facility

On April 29, 2016, the Company entered into the CS Agreement, among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent. On April 11, 2017, the Company executed the CS Amendment with its Senior Credit Facility lenders to amend certain provisions of its Senior Credit Facility, as described below.

The CS Agreement initially provided for an $880 million senior secured term loan facility and a $100 million senior secured revolving credit facility. The Term Loan Facility was issued at a discount of $17.6 million, or 98% of par value, and has a maturity date of April 29, 2022, subject to customary acceleration events and repayment, extension or refinancing. The Revolving Credit Facility has a maturity date of April 29, 2021, subject to certain customary acceleration events and repayment, extension or refinancing. The CS Amendment reduced the Revolving Credit Facility’s borrowing capacity from $100 million to $87.5 million until December 31, 2017, at which time the borrowing capacity decreases to $75.0 million.

The CS Agreement contains customary covenants, including a maximum permitted Secured Net Leverage Ratio, as determined based on 12 month trailing Consolidated EBITDA, as defined in the CS Agreement. On April 11, 2017, the Company executed the CS Amendment with its Senior Credit Facility lenders to amend the calculation of the Secured Net Leverage Ratio beginning January 1, 2017 to December 31, 2018, among other provisions. The CS Amendment raised the maximum Secured Net Leverage Ratio required for the Company to remain in compliance for certain periods, and also changed the calculation of compliance for specified periods As of June 30, 3017 and December 31, 2016, the Company had a Secured Net Leverage Ratio of 3.85 to 1.00 and 3.93 to 1.00, respectively, implying additional borrowing capacity of $154.6 million as of June 30, 2017.

After giving effect to the CS Amendment, the maximum Secured Net Leverage Ratio permitted under the CS Agreement, as determined based on 12 month trailing Consolidated EBITDA and as defined in the CS Agreement, follows:

	Maximum
	Secured Net
Period	Leverage Ratio
Period from January 1, 2017 to June 30, 2017	4.50 to 1.00
Period from July 1, 2017 to December 31, 2018	4.75 to 1.00
Period from January 1, 2019 and thereafter	4.00 to 1.00

In addition to amending the calculation of the Secured Net Leverage Ratio and the maximum Secured Net Leverage Ratio, the CS Amendment also affects other terms of the CS Agreement as follows:

• Through December 31, 2018, the Company is required to use asset sales proceeds to make mandatory redemptions under the Term Loan Facility. After December 31, 2018, the Company is required to use asset sale proceeds to make mandatory redemptions under the Term Loan Facility to the extent those proceeds are not expected to be reinvested within 15 months.

• Through December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments, as defined in the CS Agreement, only if the Secured Net Leverage Ratio, adjusted for the requested Incremental Term Loan borrowing, is below 3.35 to 1.00. After December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments for the greater of $100 million or an amount which would produce a Secured Net Leverage Ratio of 3.35 to 1.00.

• Through December 31, 2018, the Company is allowed to incur Permitted Additional Debt, as defined in the CS Agreement, only if the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 4.50 to 1.00. After December 31, 2018, the Company may incur Permitted Additional Debt so long as the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 5.50 to 1.00.

Prior to the CS Amendment, interest under the Term Loan Facility accrued, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 5.75%, or the alternate base rate plus 4.75%. Following the CS Amendment, interest under the Term Loan Facility accrues, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 1% plus 6.75%, or the alternate base rate plus 5.75%. The effective interest rate on the Term Loan Facility was 8.79% as of June 30, 2017. Interest under the Revolving Credit Facility accrues, at the option of the Company, at adjusted LIBOR, subject to statutory reserves and a floor of 0% plus 2.75%, or the alternate base rate plus 1.75%, and remains unchanged under the CS Amendment.

Borrowings from the Revolving Credit Facility are used for working capital and general corporate purposes. As of June 30, 2017, the Company had no borrowing outstanding under the Revolving Credit Facility and had $10.3 million of letters of credit outstanding that were primarily related to the self-insured retention levels of professional and general liability and workers’ compensation liability insurance as security for the payment of claims. As of June 30, 2017, the Company had borrowing capacity under its Revolving Credit Facility of $77.2 million.

ABL Credit Facility

On April 29, 2016, the Company entered into an ABL Credit Agreement (the “UBS Agreement,” and together with the CS Agreement, collectively, the “Credit Agreements”), among the Company, the lenders party thereto and UBS AG, Stamford Branch (“UBS”), as administrative agent and collateral agent. The UBS Agreement provides for a $125 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”). The available borrowings from the ABL Credit Facility, which are based on eligible patient accounts receivable, are used for working capital and general corporate purposes. As of June 30, 2017, the Company had $50.0 million outstanding on the ABL Credit Facility and borrowing capacity of $75.0 million.

On April 11, 2017, the Company executed an amendment to the UBS Agreement with its lender party thereto, which aligned the provisions of the UBS Agreement with the CS Agreement. There were no changes to the UBS Agreement that impact the Company’s current interest or covenant calculations associated with the ABL Credit Facility.

The ABL Credit Facility has a maturity date of April 29, 2021, subject to customary acceleration events and repayment, extension or refinancing. Interest under the ABL Credit Facility accrues, at the option of the Company, at a base rate or LIBOR, subject to statutory reservesand a floor of 0%,except that all swingline borrowings will accrue interest based on the base rate, plus an applicable margin determined by the average excess availability under the ABL Credit Facility for the fiscal quarter immediately preceding the date of determination. The applicable margin ranges from 1.75% to 2.25% for LIBOR advances and from 0.75% to 1.25% for base rate advances.

The ABL Credit Facility has a “Covenant Trigger Event” definition that requires the Company to maintain excess availability under the ABL Credit Facility equal to or greater than the greater of (i) $12.5 million and (ii) 10% of the aggregate commitments under the ABL Credit Facility. If a Covenant Trigger Event occurs, then the Company is required to maintain a minimum Consolidated Fixed Charge Ratio of 1.10 to 1.00 until such time that a Covenant Trigger Event is no longer continuing. In addition, if excess availability under the ABL Credit Facility were to fall below the greater of (i) 12.5% of the aggregate commitments under the ABL Credit Facility and (ii) $15.0 million, then a “Cash Dominion Event” would be triggered upon which the lenders could assume control of the Company’s cash.

Credit Agreement Covenants

In addition to the specific covenants described above, the Credit Agreements contain customary negative covenants which limit the Company’s ability to, among other things, incur additional indebtedness, create liens, make investments, transfer assets, merge or acquire assets, and make restricted payments, including dividends, distributions and specified payments on other indebtedness. They include customary events of default, including payment defaults, material breaches of representations and warranties, covenant defaults, default on other material indebtedness, customary Employee Retirement Income Security Act (“ERISA”)events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business. The Credit Agreements also contain customary affirmative covenants and representations and warranties.

Senior Notes

On April 22, 2016, the Company issued $400 million aggregate principal amount of 11.625% Senior Notes due 2023, pursuant to the Indenture. The Senior Notes were issued at a discount of $6.9 million, or 1.734%, in a private placement and are senior unsecured obligations of the Company guaranteed on a senior basis by certain of the Company’s subsidiaries (the “Guarantors”). The Senior Notes mature on April 15, 2023 and bear interest at a rate of 11.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016. Interest on the Senior Notes accrues from the date of original issuance and is calculated on the basis of a 360-day year comprised of twelve 30-day months. The effective interest rate on the Senior Notes was 12.48% as of June 30, 2017.

The Indenture contains covenants that, among other things, limit the ability of the Company and certain of its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, create or incur certain liens, sell assets and subsidiary stock, transfer all or substantially all of its assets or enter into merger or consolidation transactions.

On May 17, 2017, the Company exchanged the 11.625% Senior Notes due 2023 (the “Initial Notes”) in the aggregate principal amount of $400 million, which were not registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of 11.625% Senior Notes due 2023 (the “Exchange Notes”), which have been registered under the Securities Act (the “Exchange Offer”). The Exchange Notes are substantially identical to the Initial Notes, except that the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Initial Notes.

On and after April 15, 2019, the Company is entitled, at its option, to redeem all or a portion of the Senior Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices specified in the table below, plus accrued and unpaid interest, if any, through the redemption date. The redemption prices are expressed as a percentage of the principal amount on the redemption date. Holders of record on the relevant record date have the right to receive interest due on the relevant interest payment date. In addition, prior to April 15, 2019, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make whole” premium, as set forth in the Indenture. The Company is entitled to redeem up to 35% of the aggregate principal amount of the Senior Notes until April 15, 2019 with the net proceeds from certain equity offerings at the redemption price set forth in the Indenture.

The following table provides a summary of the redemption periods and prices related to the Senior Notes:

	Redemption
Period	Prices
Period from April 15, 2019 to April 14, 2020		108.719	%
Period from April 15, 2020 to April 14, 2021		105.813	%
Period from April 15, 2021 to April 14, 2022		102.906	%
Period from April 15, 2022 to April 14, 2023		100.000	%

Debt Issuance Costs and Discounts

The following table provides a summary of unamortized debt issuance costs and discounts (in thousands):

	June 30,			December 31,
	2017			2016
Debt issuance costs	$	32,084		$	29,146
Debt discounts		24,536			24,536
Total debt issuance costs and discounts		56,620			53,682
Less:  Amortization of debt issuance costs and discounts		(9,122	)		(4,918	)
Total unamortized debt issuance costs and discounts	$	47,498		$	48,764

Capital Lease Obligations and Other Debt

The Company’s debt arising from capital lease obligations primarily relates to the Company’s corporate office in Brentwood, Tennessee. As of June 30, 2017, this capital lease obligation was $18.3 million. The remainder of the Company’s capital lease obligations primarily relate to property and equipment at its hospitals and corporate office. Other debt consists of physician loans and miscellaneous notes payable to banks.

Debt Maturities

The following table provides a summary of debt maturities for the next five years and thereafter (in thousands):

	June 30, 2017
Remainder of 2017	$	919
2018		7,820
2019		10,168
2020		10,251
2021		10,356
Thereafter		1,294,354
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868

Interest Expense, Net

The following table provides a summary of the components of interest expense, net (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Senior Credit Facility:
Revolving Credit Facility	$	192		$	85		$	331		$	85
Term Loan Facility		16,642			10,432			31,283			10,432
ABL Credit Facility		613			82			869			82
Senior Notes		11,629			8,914			23,255			8,914
Amortization of debt issuance costs and discounts		2,224			1,191			4,204			1,191
All other interest expense (income), net		(842	)		(359	)		(1,954	)		210
Total interest expense, net, from long-term debt		30,458			20,345			57,988			20,914
Due to Parent, net		—			8,931			-			35,814
Total interest expense, net	$	30,458		$	29,276		$	57,988		$	56,728

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Other Long-Term Liabilities

6 Months Ended

Jun. 30, 2017

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

NOTE 8 – OTHER LONG-TERM LIABILITIES

The following table provides a summary of the components of other long-term liabilities (in thousands):

	June 30,		December 31,
	2017		2016
Professional and general liability insurance reserves	$	80,005	$	74,194
Workers' compensation liability insurance reserves		20,164		17,416
Benefit plan liabilities		36,028		10,722
Deferred rent		3,492		4,001
Other miscellaneous long-term liabilities		2,067		2,663
Total other long-term liabilities	$	141,756	$	108,996

See Note 17 — Commitments and Contingencies for additional information about the Company’s insurance reserves and Note 15 — Employee Benefit Plans for additional information about the Company’s benefit plan liabilities.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company’s cash and cash equivalents, patient accounts receivable, amounts due from and due to third-party payors, and accounts payable approximate their fair values due to the short-term maturity of these financial instruments.

The Company recorded impairment charges related to long-lived assets and goodwill during the three and six months ended June 30, 2017 and the year ended December 31, 2016. See Note 3 — Impairment of Long-Lived Assets and Goodwill. The assessment of fair value was based on Level 3 inputs, as the valuation methodologies used to determine impairment were based on internal projections and unobservable inputs. The portion of impairment related to hospital assets held for sale was determined based on Level 2 inputs, as the valuation methodologies used to determine impairment considered letters of intent received on these hospitals.

The following table provides a summary of the carrying amounts and estimated fair values of the Company’s long-term debt (in thousands):

	June 30, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Revolving Credit Facility	$	—	$	—	$	—	$	—
Term Loan Facility		857,587		860,803		868,419		849,427
ABL Credit Facility		50,000		50,000		—		—
Senior Notes		400,000		355,980		400,000		334,720
Other debt		26,281		26,281		27,170		27,170
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868	$	1,293,064	$	1,295,589	$	1,211,317

The Company considers its long-term debt instruments to be measured based on Level 2 inputs. Information about the valuation methodologies used in the determination of the fair values for the Company’s long-term debt instruments follows:

• Term loan facility. The estimated fair value is based on publicly available trading activity and supported with information from the Company’s lending institutions regarding relevant pricing for trading activity.

• Senior notes. The estimated fair value is based on the closing market price for these notes.

• All other debt. The carrying amounts of the Company’s debt instruments, including the revolving credit facility, ABL credit facility, capital lease obligations, physician loans and miscellaneous notes payable to banks, approximate their estimated fair values due to the nature of these obligations.

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Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Equity

NOTE 10 – EQUITY

Preferred Stock

In connection with the Spin-off, the Company authorized 100,000,000 shares of preferred stock, par value of $0.0001 per share. No shares have been issued as of June 30, 2017. The Board has the discretion, subject to limitations prescribed by Delaware law and by its amended and restated certificate of incorporation, to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock, when and if issued.

Common Stock

In connection with the Spin-off, the Company authorized 300,000,000 shares of common stock, par value of $0.0001 per share, and issued 28,412,054 shares of common stock on April 29, 2016 to CHS stockholders of record on the Record Date, or April 22, 2016. The common stock began trading on the NYSE on May 2, 2016 under the ticker symbol “QHC.” As of June 30, 2017 and December 31, 2016, the Company had 30,297,524 shares and 29,482,050 shares, respectively, of common stock issued and outstanding.

Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters for which stockholders may vote. Holders of the Company’s common stock will not have cumulative voting rights in the election of directors. There are no preemptive rights, conversion, redemption or sinking fund provisions applicable to the common stock. In the event of liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in the assets available for distribution. Delaware law prohibits the Company from paying any dividends unless it has capital surplus or net profits available for this purpose. In addition, the Company’s Credit Agreements impose restrictions on its ability to pay dividends.

Additional Paid-in Capital

In connection with the Spin-off, the Company issued common stock, as described above, to CHS stockholders. In addition, pursuant to the Separation and Distribution Agreement, CHS contributed capital in excess of par value of common stock of $530.6 million, in lieu of a cash settlement payment, related to the remaining intercompany indebtedness with CHS and the Parent’s equity attributable to CHS. See Note 1 — Description of the Business and Spin-off for a summary of the major transactions to effect the Spin-off.

Accumulated Deficit

Accumulated deficit of the Company, as shown on the consolidated and combined balance sheets as of June 30, 2017 and December 31, 2016, represents the Company’s cumulative net losses since the Spin-off date. The cumulative earnings and losses of the Company prior to the Spin-off were included in Due to Parent, net on the consolidated and combined balance sheets.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11 – INCOME TAXES

The Company, or one of its subsidiaries, is subject to U.S. federal income tax and income tax of multiple state and local jurisdictions. The Company provides for income taxes based on the enacted tax laws and rates in jurisdictions in which it conducts its operations. Prior to the Spin-off, the Company was included in the consolidated federal, state and local income tax returns filed by CHS and calculated income taxes for the purpose of carve-out financial statements using the “separate return method.” The Company deemed the amounts that it would have paid to or received from the U.S. Internal Revenue Service and certain state jurisdictions, had QHC not been a member of CHS’ consolidated tax group, to be immediately settled with CHS through Due to Parent, net in the consolidated and combined balance sheets. The Company is filing its own consolidated federal, state and local income tax returns after the Spin-off.

The Company’s effective tax rates were 0.8% and 15.4% for the three months ended June 30, 2017 and 2016, respectively and (0.8)% and 15.7% for the six months ended June 30, 2017 and 2016, respectively. The decrease in the Company’s effective tax rate for the three and six months ended June 30, 2017, when compared to the three and six months ended June 30, 2016, was primarily due to recording a valuation allowance against the deferred tax assets arising from the Company’s pre-tax loss in the 2017 period that are not more likely than not to be recognized.

The Company’s deferred income tax liabilities, net were $31.7 million as of June 30, 2017, compared to $31.5 million as of December 31, 2016, a $0.2 million increase. This increase was primarily due to a deferred tax provision for tax deductible amortization on indefinite-lived intangible assets and goodwill, net of a deferred tax benefit on the impairment of goodwill related to the reclassification of QHC hospitals to assets held for sale in the 2017 period.

In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. The Company assesses its income tax positions and records income tax benefits for all tax years subject to examination based on management’s evaluation of the facts, circumstances, and information available at the reporting date. The Company is not aware of any unrecognized tax benefits; therefore, it has not recorded any such amounts for the three and six months ended June 30, 2017 and 2016.

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 12 – EARNINGS PER SHARE

The following table provides a summary of the computation of basic and diluted earnings (loss) per share (in thousands, except earnings per share and shares):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator:
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		55			1,095			411			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	(245,061	)	$	(58,191	)	$	(250,063	)
Denominator:
Weighted-average shares outstanding - basic and diluted		28,145,215			28,412,720			27,977,738			28,412,389
Basic and diluted earnings (loss) per share attributable to Quorum Health Corporation stockholders	$	(1.09	)	$	(8.63	)	$	(2.08	)	$	(8.80	)

For comparative purposes, the Company used 28,412,054 shares as the number of basic and diluted shares outstanding for all periods prior to the Spin-off in calculating basic and diluted earnings (loss) per share. This number of shares represents the number of shares issued on the Spin-off date. Due to the net losses attributable to Quorum Health Corporation in the three and six months ended June 30, 2017 and 2016, no incremental shares were included in diluted earnings (loss) per share for these periods because the effect of the incremental shares would be anti-dilutive. No incremental shares were considered for any periods prior to the Spin-off.

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Segments

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segments

NOTE 13 – SEGMENTS

The Company operates in two distinct operating segments, its hospital operations business and its hospital management advisory and healthcare consulting services business. The hospital operations segment includes the operations of the Company’s owned and leased hospitals and their affiliated outpatient facilities that provide inpatient and outpatient healthcare services. The hospital management advisory and healthcare consulting services segment includes the operations of QHR. Only the hospital operations segment meets the criteria as a separate reportable segment. The financial information for QHR has been combined with the Company’s corporate functions and reported below as part of the all other reportable segment

Prior to the Spin-off, the Company included management fees allocated from Parent in the operating expenses of the hospital operations segment. Following the Spin-off, the Company began presenting general and administrative costs for corporate functions in the all other reportable segment.

The following tables provide a summary of financial information related to the Company’s segments (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Net operating revenues:
Hospital operations	$	509,118		$	508,906	$	1,015,536		$	1,036,317
All other		21,028			20,831		42,250			42,971
Total net operating revenues	$	530,146		$	529,737	$	1,057,786		$	1,079,288
Adjusted EBITDA:
Hospital operations	$	41,536		$	26,457	$	79,002		$	75,396
All other		(7,106	)		2,775		(18,430	)		10,060
Total Adjusted EBITDA	$	34,430		$	29,232	$	60,572		$	85,456

	June 30,		December 31,
	2017		2016
Assets:
Hospital operations	$	1,759,694	$	1,802,121
All other		227,807		192,249
Total assets	$	1,987,501	$	1,994,370

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), its most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Adjusted EBITDA	$	34,430		$	29,232		$	60,572		$	85,456
Interest expense, net		(30,458	)		(29,276	)		(57,988	)		(56,728	)
(Provision for) benefit from income taxes		245			44,565			(456	)		46,239
Depreciation and amortization		(20,586	)		(31,463	)		(42,706	)		(62,620	)
Legal, professional and settlement costs		(3,934	)		(5,447	)		(4,469	)		(5,688	)
Impairment of long-lived assets and goodwill		(12,900	)		(250,400	)		(16,200	)		(250,400	)
Gain (loss) on sale of hospitals, net		4,321			—			5,191			—
Transaction costs related to the Spin-off		—			(1,177	)		(31	)		(4,912	)
Post-spin headcount reductions		(1,693	)		—			(1,693	)		—
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE 14 – STOCK-BASED COMPENSATION

On April 1, 2016, the Company adopted the Quorum Health Corporation 2016 Stock Award Plan (“2016 Stock Award Plan”). The Company filed a Registration Statement on Form S-8 on April 29, 2016 to register 4,700,000 shares of QHC common stock that may be issued under the plan.

As defined in the Separation and Distribution Agreement, QHC and CHS employees who held CHS restricted stock awards on the Record Date received QHC restricted stock awards for the number of whole shares, rounded down, of QHC common stock that they would have received as a shareholder of CHS as if the underlying CHS stock were unrestricted on the Record Date, except, that with respect to a portion of CHS restricted stock awards granted to any QHC employees on March 1, 2016, as discussed above, that were cancelled and forfeited on the Spin-off date. The QHC restricted stock awards received by QHC and CHS employees in connection with the Spin-off vest on the same terms as the CHS restricted stock awards to which they relate, through the continued service by such employees with their respective employer. CHS restricted stock awards were adjusted by increasing the number of shares of CHS stock subject to restricted stock awards by an amount of whole shares, rounded down, necessary to preserve the intrinsic value of such awards at the Spin-off date. QHC did not issue any stock options as part of the distribution of shares to holders of CHS stock options.

On April 28, 2017, the Compensation Committee of the Board of Directors (the “Compensation Committee”), and the Governance and Nominating Committee of the Board of Directors (the “Governance and Nominating Committee”), granted 168,618 time-vested restricted stock awards to its non-employee directors. The grants were made pursuant to the 2016 Stock Award Plan and a director restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse on February 22, 2018.

On February 22, 2017, the Compensation Committee granted 230,000 performance-based restricted stock awards to the Company’s executive officers. The grants were made pursuant to the 2016 Stock Award Plan and a performace-based restricted stock award agreement. If the performance-based objectives are attained in accordance with the targets set forth in the performance-based restricted stock award agreement, the restrictions on the restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On February 22, 2017, the Compensation Committee granted 230,000 time-based restricted stock awards to the Company’s executive officers, as well as 420,000 time-based restricted stock awards to certain employees of the Company. The grants were made pursuant to the 2016 Stock Award Plan and a restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On May 3, 2016, the Compensation Committee granted 460,000 performance-based restricted stock awards to the Company’s executive officers. The grants were made pursuant to the 2016 Stock Award Plan and a performance-based restricted stock award agreement. If the performance-based objectives are attained in accordance with the targets set forth in the performance-based restricted stock award agreement, the restrictions on the restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date.

On May 3, 2016, the Compensation Committee granted 551,005 time-vested restricted stock awards to certain employees of the Company. The grants were made pursuant to the 2016 Stock Award Plan and a restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse in equal installments on each of the first three anniversaries of the grant date, except for 106,005 restricted stock awards, referred to by the Company as recoupment awards, which have a different vesting period. The recoupment awards were issued to a select group of QHC employees that were granted restricted stock awards by CHS on March 1, 2016. Pursuant to the Separation and Distribution Agreement, two-thirds of the shares granted to the QHC employee group on this grant date were canceled by CHS in connection with the Spin-off. The recoupment awards were issued by QHC and included in the May 3, 2016 grant of QHC restricted stock awards for the purpose of restoring the benefit previously provided by CHS to this employee group. Restrictions on the recoupment awards lapse in equal installments on the second and third anniversaries of the grant date.

On May 3, 2016, the Board, upon recommendation of its Compensation Committee and its Governance and Nominating Committee, granted 10,000 time-vested restricted stock awards to each of its seven non-employee directors. The grants were made pursuant to the 2016 Stock Award Plan and a director restricted stock award agreement. The restrictions on the time-vested restricted stock awards will lapse on the first anniversary of the grant date.

The following table provides a summary of the activity related to unvested QHC restricted stock awards held by QHC and CHS employees during the six months ended June 30, 2017 that were distributed in the Spin-off (in shares):

	QHC Awards Distributed in Spin-off
	QHC Employees			CHS Employees			Total
Unvested restricted stock awards at December 31, 2016		52,462			621,525			673,987
Vested		(34,009	)		(202,286	)		(236,295	)
Forfeited		(14,129	)		(138,844	)		(152,973	)
Unvested restricted stock awards at June 30, 2017		4,324			280,395			284,719

The following table provides a summary of the activity related to unvested restricted stock awards during the six months ended June 30, 2017 that were granted to QHC employees subsequent to the Spin-off:

	QHC Awards Granted
	Subsequent to Spin-off
				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock awards at December 31, 2016		1,081,005		$	12.77
Granted		1,093,618			7.64
Vested		(282,582	)		12.77
Forfeited		(125,069	)		12.43
Unvested restricted stock awards at June 30, 2017		1,766,972			9.62

Following the Spin-off, the Company began recording stock-based compensation expense related to the vesting of QHC restricted stock awards issued to QHC employees on the Spin-off date, CHS restricted stock awards held by QHC employees on the Spin-off date, and restricted stock awards granted by QHC on May 3, 2016. Stock-based compensation expense is recorded in salaries and benefits for periods following the Spin-off. Prior to the Spin-off, an estimated portion of CHS’ stock-based compensation expense was allocated to QHC through the monthly corporate management fee from CHS, which was included in other operating expenses in the consolidated and combined statements of income, and therefore not included in stock-based compensation expense in the table below. The estimated costs allocated to QHC from CHS for stock-based compensation were $0.6 million and $2.3 million for the three and six months ended June 30, 2016, respectively.

The following table provides a summary of stock-based compensation expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Stock-based compensation resulting from the Spin-off	$	448	$	809	$	1,364	$	809
Stock-based compensation related to grants following the Spin-off		2,083		1,088		3,964		1,088
Total stock-based compensation expense	$	2,531	$	1,897	$	5,328	$	1,897

As of June 30, 2017, the Company had $1.2 million of unrecognized stock-based compensation expense related to the outstanding unvested QHC and CHS restricted stock awards held by QHC employees as of the Spin-off date and $13.3 million of unrecognized stock-based compensation expense related to the QHC restricted stock awards granted subsequent to the Spin-off.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2017

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

NOTE 15 – EMPLOYEE BENEFIT PLANS

Following the Spin-off, the Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, of which certain of the Company’s subsidiaries are the plan sponsors. The rights and obligations of these plans were transferred from CHS in connection with the Spin-off, pursuant to the Separation and Distribution Agreement.

Defined Contribution Plans

The Quorum Health Retirement Savings Plan (the “RSP”) is a defined contribution plan established on January 1, 2016 by CHS in anticipation of the Spin-off. Prior to the Spin-off, the cumulative liability for these benefit costs was recorded in Due to Parent, net. The assets and liabilities under this plan were transferred to QHC in connection with the Spin-off. The RSP covers the majority of the employees at the Company’s subsidiaries. The Company has other minor defined contribution plans at certain of its hospitals that cover employees under the terms of these individual plans. Total expense to the Company under all defined contribution plans was $4.0 million and $3.7 million for the three months ended June 30, 2017 and 2016, respectively, and $6.9 million and $7.0 million for the six months ended June 30, 2017 and 2016, respectively. The benefit costs associated with the RSP are recorded as salaries and benefits expense in the consolidated and combined statements of income.

Deferred Compensation Plans

Certain QHC employees participated in CHS’ unfunded deferred compensation plans that allowed participants to defer receipt of a portion of their compensation. The election period for those employees continued under the CHS plan through December 31, 2016. In January, 2017, the assets and liabilities attributable to QHC employees of $22.9 million and $23.9 million, respectively, were transferred to a new plan established by QHC, as described below.

On August 18, 2016, the Compensation Committee of the Board adopted the Executive Nonqualified Excess Plan Adoption Agreement (the “Adoption Agreement”) and the Executive Nonqualified Excess Plan Document (the “Plan Document”), that together, the Adoption Agreement names as the QHCCS, LLC Nonqualified Deferred Compensation Plan (the “NQDCP”). The NQDCP is an unfunded, nonqualified deferred compensation plan that provides deferred compensation benefits for a select group of management, highly compensated employees and independent contractors of the Company’s wholly-owned subsidiary, QHCCS, LLC (“QHCCS”), a Delaware limited liability company, including the Company’s named executive officers. The NQDCP permits participants to defer a portion of their annual base salary, service bonus and performance-based compensation, as well as up to 100% of their incentive compensation in any calendar year. In addition to participant deferrals, QHCCS and/or its affiliates may make discretionary credits to participants’ accounts for any year. As of June 30, 2017, the assets and liabilities under this plan were $23.4 million and $24.5 million, respectively, and are included in other long-term assets and other long-term liabilities in the consolidated and combined balance sheet.

Supplemental Executive Retirement Plan

On April 1, 2016, the Board adopted the Quorum Health Corporation Supplemental Executive Retirement Plan (the “Original SERP Plan”). Pursuant to the Employee Matters Agreement between the Company and CHS, the Company assumed all liabilities for all obligations under the Original SERP Plan for the benefits of QHC employees, as defined in the Employee Matters Agreement, except that no additional benefits were to accrue under the Original SERP Plan following the Spin-off. The accrued benefit liability for the Original SERP Plan that was transferred to the Company in connection with the Spin-off was $6.0 million and is included in other long-term liabilities in the consolidated and combined balance sheet. There were no assets transferred to the Company related to the Original SERP Plan in connection with the Spin-off.

On May 24, 2016, the Board, upon recommendation of the Compensation Committee, approved the Company’s Amended and Restated Supplemental Executive Retirement Plan (the “Amended and Restated SERP”), in order to accrue additional benefits with respect to QHC Employees who otherwise qualify as “Participants” under the Amended and Restated SERP. The Amended and Restated SERP is a noncontributory non-qualified deferred compensation plan under Section 409A of the Internal Revenue Code. The benefit costs under both SERP plans were $0.5 million for the three months ended June 30, 2017 and $1.0 million for the six months ended June 30, 2017, and are included in salaries and benefits in the consolidated and combined statements of income. The current and long-term portions of the benefit liability for the Amended and Restated SERP were $2.3 million and $8.0 million, respectively as of June 30, 2017. As of December 31, 2016, the current and long-term portions of the benefit liability were $2.3 million and $7.1 million, respectively. The current portion is included in accrued salaries and benefits and the long-term portion is included in other long-term liabilities in the consolidated and combined balance sheet.

Director’s Fees Deferral Plan

On September 16, 2016, the Board adopted the Quorum Health Corporation Director’s Fees Deferral Plan (the “Director’s Plan”). Pursuant to the Director’s Plan, members of the Board may elect to defer and accumulate fees, including retainer fees and fees for attendance at Board meetings and Board committees. A director may elect that all or any specified portion of the director’s fees to be earned during a calendar year be credited to a director’s cash account and/or a director’s stock unit account maintained on the individual director’s behalf in lieu of payment. Payment of amounts credited to a director’s cash account and stock unit account will be made upon a payment commencement event, as defined in the Director’s Plan, in accordance with the payment method elected by the individual director, either in lump sum or in a number of annual installments, not to exceed 15 installments. The Director’s Plan extends to directors of the Board not employed by the Company or any of its subsidiaries. Pursuant to the Director’s Plan, the Company registered and made available for issuance under the Director’s Plan a maximum of 150,000 shares of QHC common stock.

Defined Benefit Pension Plan

QHC provides benefits to employees at one of its hospitals through a defined benefit plan (the “Pension Plan”). The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements. Employer contributions to the Pension Plan are in accordance with the minimum funding requirements of ERISA. Benefit costs related to the Pension Plan was $0.1 million and $0.1 million for the three months ended June 30, 2017 and 2016, respectively, and $0.2 million and $0.1 million for the six months ended June 30, 2017 and 2016, respectively. The Company recognizes the unfunded liability of the Pension Plan in other long-term liabilities in its consolidated and combined balance sheets. Unrecognized gains (losses) and prior service credits (costs) are recognized as other comprehensive income (loss). The accrued benefit liability for the Pension Plan was $1.1 million and $1.1 million at June 30, 2017 and December 31, 2016, respectively.

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Related Party Transactions

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 16 – RELATED PARTY TRANSACTIONS

CHS was a related party to QHC prior to the Spin-off. The significant transactions and balances with CHS prior to the Spin-off and the agreements between QHC and CHS as of and subsequent to the Spin-off are described below.

Carve-Out from Parent

Prior to the Spin-off, QHC did not operate as a separate company and stand-alone financial statements were not prepared. Historically, QHC was managed and operated in the normal course of business with all other hospitals and affiliates of CHS. Accordingly, for the purposes of the carve-out financial statements related to the Spin-off, a combined opening balance sheet for the QHC hospitals and QHR was established. The combined opening balance sheet included the assets and liabilities of QHC hospitals and QHR, as reported by CHS, and a net liability to CHS, referred to as Due to Parent, net for the net investment held by CHS related to its contribution of these net assets. The operating results of the QHC hospitals and QHR prior to the Spin-off were derived from the CHS operating results for these entities. In addition, certain corporate overhead costs were allocated to QHC from CHS during the carve-out period for the purpose of estimating QHC’s share of these expenses.

Allocated Costs from CHS during the Carve-Out Period

CHS allocated costs to QHC during the carve-out period for a portion of its corporate overhead costs and any other costs related to QHC hospitals and QHR that were paid by CHS or covered by an agreement, policy or contract owned by CHS.

The following table provides a summary of allocated costs to QHC from CHS (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016
Insurance costs	$	10,486	$	44,246
Management fees from Parent		2,966		11,792
All other allocated costs		5,305		25,021
Total related party operating costs and expenses	$	18,757	$	81,059

The allocation of insurance costs from CHS primarily included costs for self-insurance estimates and third-party policies related to employee health, professional and general liability and workers’ compensation liability coverage. Insurance costs were primarily allocated to QHC based on claims history of the QHC hospitals, as determined on an individual hospital level. Corporate management fees were allocated to QHC for certain corporate functions of CHS, including services such as, among others, executive and divisional management, treasury, accounting, risk management, legal, procurement, human resources, information technology support and other administrative support services. These corporate overhead costs were allocated to QHC using a ratio based on the number of licensed beds at each QHC hospital in proportion to CHS’ total licensed beds. This methodology is comparable to how CHS allocates corporate overhead costs to all of its hospitals through a management fee charge that eliminates in consolidation. All other allocated costs included any other costs allocated to QHC hospitals or QHR and that were not part of management fees. These costs were allocated to QHC using ratios based on revenues, expenses or licensed beds. If possible, allocations were made on a specific identification basis.

Following the Spin-off, the Company began performing corporate functions using internal resources or purchased services, certain of which are required to be provided by CHS pursuant to the transition services agreements and other ancillary agreements. See the section “Agreements with CHS Related to the Spin-off” below.

Due to Parent, Net

Prior to the Spin-off, Due to Parent, net in the consolidated and combined balance sheets represented the Company’s cumulative liability to CHS for the net assets of QHC hospitals and QHR, as well as an allocation of costs for corporate functions. See Note 1 — Description of the Business and Spin-off and Note 2 — Basis of Presentation and Significant Accounting Policies for additional information on the types of transactions settled through Due to Parent, net during the carve-out period and the transactions that occurred to settle the liability in connection with the Spin-off.

During the carve-out period, QHC was charged interest on a monthly basis by CHS on the amount of Due to Parent, net outstanding at the end of each month. Interest rates were variable and ranged from 4% to 7% during the carve-out period. Interest expense was recorded as an increase in the Due to Parent, net liability and was deemed settled each month. For the three and six months ended June 30, 2016, interest expense related to Due to Parent, net was $8.9 million and $35.8 million, respectively.

Agreements with CHS Related to the Spin-off

In connection with the Spin-off and as of April 29, 2016, the Company entered into certain agreements with CHS that allocated between the Company and CHS the various assets, employees, liabilities and obligations (including investments, property, employee benefits and tax-related assets and liabilities) that were previously part of CHS. In addition, these agreements govern certain relationships between, and activities of, the Company and CHS for a definitive period of time after the Spin-off, as specified by each individual agreement.

The agreements were as follows:

• Separation and Distribution Agreement. This agreement governed the principal actions of both the Company and CHS that needed to be taken in connection with the Spin-off. It also sets forth other agreements that govern certain aspects of the Company’s relationship with CHS following the Spin-off.

• Tax Matters Agreement. This agreement governs respective rights, responsibilities and obligations of the Company and CHS after the Spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local income taxes, other tax matters and related tax returns.

• Employee Matters Agreement. This agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of both the Company and CHS. It also allocated liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs as of the Spin-off date.

In addition to the agreements referenced above, the Company entered into certain transition services agreements and other ancillary agreements with CHS defining agreed upon services to be provided by CHS to certain or all QHC hospitals, as determined by each agreement, commencing on the Spin-off date. The agreements generally have terms of five years.

A summary of the major provisions of the transition services agreements follows:

• Shared Services Centers Transition Services Agreement. This agreement defines services to be provided by CHS related to billing and collections utilizing CHS shared services centers. Services include, but are not limited to, billing and receivables management, statement processing, denials management, cash posting, patient customer service, and credit balance and other account research. In addition, it provides for patient pre-arrival services, including pre-registration, insurance verification, scheduling and charge estimates. Fees are based on a percentage of cash collections each month.

• Computer and Data Processing Transition Services Agreement. This agreement defines services to be provided by CHS for information technology infrastructure, support and maintenance. Services include, but are not limited to, operational support for various applications, oversight, maintenance and information technology support services, such as helpdesk, product support, network monitoring, data center operations, service ticket management and vendor relations. Fees are based on both a fixed charge for labor costs, as well as direct charges for all third-party vendor contracts entered into by CHS on QHC’s behalf.

• Receivables Collection Agreement (“PASI”). This agreement defines services to be provided by CHS’ wholly-owned subsidiary, PASI, which currently serves as a third-party collection agency to QHC related to accounts receivable collections of both active and bad debt accounts of QHC hospitals, including both receivables that existed as of the Spin-off date and those that have occurred since the Spin-off date. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Billing and Collection Agreement (“PPSI”). This agreement defines services to be provided by CHS related to collections of accounts receivable generated by the Company’s affiliated outpatient healthcare facilities. Services include, but are not limited to, self-pay collections, insurance follow-up, collection letters and calls, payment arrangements, payment posting, dispute resolution and credit balance research. Fees are based on the type of service and are calculated based on a percentage of recoveries.

• Employee Service Center Agreement. This agreement defines services to be provided by CHS related to payroll processing and human resources information systems support. Fees are based on a fixed charge per employee headcount per month.

• Eligibility Screening Services Agreement. This agreement defines services to be provided by CHS for financial and program criteria screening related to Medicaid or other program eligibility for pure self-pay patients. Fees are based on a fixed charge for each hospital receiving services.

The total expenses recorded by the Company under transition services agreements with CHS following the Spin-off combined with the allocations from CHS for these same services prior to the Spin-off were $16.0 million and $17.8 million for the three months ended June 30, 2017 and 2016, respectively, and $32.3 million and $34.1 million for the six months ended June 30, 2017 and 2016, respectively. The Company is disputing in arbitration certain charges under the transition services agreements with CHS.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is a party to various legal, regulatory and governmental proceedings incidental to its business. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental proceedings, including the matters described herein, will have a material adverse effect on the operating results, financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in these matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

In connection with the Spin-off, CHS agreed to indemnify QHC for certain liabilities relating to outcomes or events occurring prior to the closing of the Spin-off, including (i) certain claims and proceedings known to be outstanding on or prior to the closing date of the Spin-off and (ii) certain claims, proceedings and investigations by governmental authorities or private plaintiffs related to activities occurring at or related to the Company’s healthcare facilities prior to the closing date of the Spin-off, but only to the extent, in the case of clause (ii), that such claims are covered by insurance policies maintained by CHS, including professional and general liability and workers’ compensation liability. In this regard, CHS will continue to be responsible for certain Health Management Associates, Inc. legal matters covered by its contingent value rights agreement that relate to the portion of CHS’ business now held by QHC. Notwithstanding the foregoing, CHS is not indemnifying QHC in respect of any claims or proceedings arising out of, or related to, the business operations of QHR at any time or its compliance with the Corporate Integrity Agreement (“CIA”) with the United States Department of Health and Human Services Office of the Inspector General (“OIG”). Subsequent to the Spin-off, the OIG entered into an “Assumption of CIA Liability Letter” with the Company reiterating the applicability of the CIA to certain of the Company’s hospitals, although the OIG declined to enter into a separate agreement with the Company.

With respect to all legal, regulatory and governmental proceedings, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company is unable to estimate an amount of possible loss or range of loss in some instances based on the significant uncertainties involved in, or the preliminary nature of, certain legal, regulatory and governmental matters.

Government Investigations

• Tooele, Utah – Physician Compensation. On May 5, 2016, the Company’s hospital in Tooele, Utah received a Civil Investigative Demand (“CID”) from the Office of the United States Attorney in Salt Lake City, Utah concerning allegations that the hospital and clinic corporation submitted or caused to be submitted false claims to the government for services referred by physicians with whom the hospital and clinic had inappropriate financial relationships, which allegedly violated federal law. The CID requested records and documentation concerning physician compensation. Because this matter remains at a preliminary stage, there are not sufficient facts available for the Company to assess what the outcome may be or to determine any estimate of the amount of loss or range of loss. The Company is fully cooperating with this investigation.

• Blue Island, Illinois – Patient Status. On October 9, 2015, the Company’s hospital in Blue Island, Illinois received a CID from the Office of the United States Attorney in Chicago, Illinois concerning allegations of upcoding observation and other outpatient services and improperly falsifying inpatient admission orders. The CID requested medical records and documentation concerning status change from observation to inpatient. The Company is unable to predict the outcome of this investigation. However, it is reasonably possible that the Company may incur a loss in connection with this investigation. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss given that the investigation is still ongoing. Under some circumstances, losses incurred in connection with an adverse resolution in this investigation could be material. The Company is fully cooperating with this investigation.

Commercial Litigation and Other Lawsuits

• Arbitration with Community Health Systems, Inc. On August 4, 2017, the Company received a demand for arbitration from CHS seeking payment of certain amounts the Company has withheld pursuant to several transition service agreements. The Company contends that the amounts are not payable to CHS and were not properly billed by CHS under the agreements. The matter is pending before the American Arbitration Association. CHS seeks payment of approximately $5.6 million relating to several of the transition service agreements. The Company intends to vigorously contest the charges as not payable to CHS under the transition service agreements and plans to make a counterclaim for additional elements of damages the Company believes it has suffered as a result of the transition service agreements. The matter is in a preliminary stage and the Company cannot assess the likelihood of a material adverse outcome at this time.

• Zwick Partners LP and Aparna Rao, Individually and On Behalf of All Others Similarly Situated v. Quorum Health Corporation, Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash, Thomas D. Miller and Michael J. Culotta. On September 9, 2016, a shareholder filed a purported class action in the United States District Court for the Middle District of Tennessee against the Company and certain of its officers. The Amended Complaint purports to be brought on behalf of a class consisting of all persons (other than defendants) who purchased or otherwise acquired securities of the Company between May 2, 2016 and August 10, 2016 and alleges that the Company and certain of its officers violated federal securities laws, including Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by making alleged false and/or misleading statements and failing to disclose certain information regarding aspects of the Company’s business, operations and compliance policies. On April 17, 2017, Plaintiff filed a Second Amended Complaint adding additional defendants, Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash. On June 23, 2017, the Company filed a motion to dismiss. The Company is vigorously defending itself in this matter. The Company is unable to predict the outcome of this matter. However, it is reasonably possible that the Company may incur a loss in connection with this matter. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss because the motion to dismiss is still pending and discovery is stayed pending resolution of the motion to dismiss. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

• United Tort Claimants v. Quorum Health Resources, LLC (U.S. Bankruptcy Court for the District of New Mexico); Douthitt-Dugger, et al. v. Quorum Health Resources, LLC (Bernalillo County, New Mexico District Court). Plaintiffs in these cases underwent surgical procedures at Gerald Champion Regional Medical Center in New Mexico that they contend were experimental and performed by an unqualified doctor. Their lawsuits, originally filed on June 11, 2010, against the doctors, QHR and the hospital are pending in state court and in federal bankruptcy court in New Mexico. Subject to an adverse result in the insurance coverage litigation referenced below, in 2012, QHR resolved plaintiffs’ claims for QHR’s liability exceeding insurance limits, and for liability not covered by insurance, for $5.1 million through a settlement agreement. Litigation of plaintiffs’ claims against QHR has continued, and the trial of the claims of most of the plaintiffs is proceeding in phases in a bankruptcy court bench trial. During the liability phase, on December 23, 2016, the federal bankruptcy court in New Mexico ruled that QHR was 16.5% at fault for plaintiffs’ injuries. On June 19, 2017, a one-day bankruptcy court bench trial was held on an issue related to the enforceability of the prior settlement agreement, and no decision has been received to date. In addition, the final phase of the trial in federal bankruptcy court, to determine plaintiffs’ damages and QHR offsets, was tried July 24 through August 7, 2017, and no decision has been received to date. The United Tort Claimants (“UTC”) have made new and yet unproven allegations during trial that they contend warrant additional liability for QHR. QHR believes that the UTC’s contentions are without merit and are vigorously defending against them. The New Mexico state court has set March 8, 2018 as the trial date for plaintiffs’ claims against QHR. QHR’s insurer, Lexington Insurance Company, is providing a defense in these cases, subject to a reservation of rights. Lexington has sued QHR in Williamson County, Tennessee seeking a declaration that plaintiffs’ claims and the cost of defending QHR are not covered by Lexington. (Lexington Insurance Company v. Quorum Health Resources, LLC, et al. (Williamson County, Tennessee Chancery Court)). No trial date has been set for Lexington’s claim against QHR to nullify insurance coverage, which QHR is also vigorously defending. The Company has sought partial summary judgment on Lexington's claim for reimbursement of defense costs incurred in the UTC actions, and no decision has been received. The Company is unable to predict the outcome of this matter. However, it is reasonably possible that the Company may incur a loss in connection with this matter. The Company is unable to reasonably estimate the amount or range of such reasonably possible loss because the proceedings with respect to the merits of the New Mexico state court action, the availability and extent of insurance coverage and damages are not sufficientlyadvanced. Under some circumstances, losses incurred in connection with adverse outcomes in this matter could be material.

Insurance Reserves

As part of the business of owning and operating hospitals, the Company is subject to potential professional and general liability and workers’ compensation liability claims or other legal actions alleging liability on its part. The Company is also subject to similar liabilities related to its QHR business.

Prior to the Spin-off, CHS provided professional and general liability insurance and workers’ compensation liability insurance to QHC and indemnified QHC from losses under these insurance arrangements related to its hospital operations business. The liabilities for claims related to QHC’s hospital operations business were determined based on an actuarial study of QHC’s operations and historical claims experience at its hospitals. Corresponding receivables from CHS were established to reflect the indemnification by CHS for each of these liabilities for claims that related to events and circumstances that occurred prior to the Spin-off date.

After the Spin-off, QHC entered into its own professional and general liability insurance and workers’ compensation liability insurance arrangements to mitigate the risk for claims exceeding its self-insured retention levels. The Company maintains a self-insured retention level for professional and general liability claims of $5 million per claim and maintains a $0.5 million per claim, high deductible program for workers’ compensation. Due to the differing nature of its business, the Company maintains separate insurance arrangements related to its subsidiary, QHR. The self-insured retention level for QHR is $6 million for professional and general liability insurance.

The following tables provide a summary of the Company’s insurance reserves related to professional and general liability claims and workers’ compensation liability claims, distinguished between those indemnified by CHS and those related to the Company’s self-insurance risks (in thousands):

	June 30, 2017
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	22,984	$	55,743	$	22,984	$	55,743
All other self-insurance reserves		—		—		1,417		24,262
Total insurance reserves for professional and general liability		22,984		55,743		24,401		80,005
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		3,498		16,808		3,498		16,808
All other self-insurance reserves		—		—		1,735		3,356
Total insurance reserves for workers' compensation liability		3,498		16,808		5,233		20,164
Total self-insurance reserves	$	26,482	$	72,551	$	29,634	$	100,169
	December 31, 2016
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	17,580	$	59,652	$	17,580	$	59,652
All other self-insurance reserves		—		—		230		14,542
Total insurance reserves for professional and general liability		17,580		59,652		17,810		74,194
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		4,863		15,958		4,863		15,958
All other self-insurance reserves		—		—		1,736		1,458
Total insurance reserves for workers' compensation liability		4,863		15,958		6,599		17,416
Total self-insurance reserves	$	22,443	$	75,610	$	24,409	$	91,610

The receivables from CHS are included in other current assets and other long-term assets on the consolidated and combined balance sheets. The liability for the current portion of professional and general liability claims is included in other current liabilities, and the liability for the current portion of workers’ compensation liability claims is included in accrued salaries and benefits. The long-term portions of both claims liabilities are included in other long-term liabilities.

Physician Recruiting Commitments

As part of its physician recruitment strategy, the Company provides income guarantee agreements to certain physicians who agree to relocate to its communities and commit to remain in practice there. Under such agreements, the Company is required to make payments to a physician in excess of the amount earned in his or her practice, up to the amount of the income guarantee. The income guarantee period over which the Company agrees to subsidize a physician’s income is typically one year and the commitment period over which the physician agrees to practice in the designated community is typically three years. Under the terms of the agreements, such payments are recoverable by the Company from physicians who do not fulfill their commitment periods. The Company’s recorded liabilities related to these income guarantee agreements were $1.1 million and $1.6 million at June 30, 2017 and December 31, 2016, respectively, which are included in other current liabilities on the consolidated and combined balance sheets. At June 30, 2017, the maximum potential amount of future payments under these guarantees in excess of the liabilities recorded was $1.5 million.

Construction and Capital Commitments

The Company is building a new patient tower and expanding surgical capacity at McKenzie – Willamette Medical Center, its hospital in Springfield, Oregon. During the three months ended June 30, 2017 and 2016, the Company incurred costs of $12.8 million and $10.3 million, respectively, and incurred costs of $24.5 million and $17.2 million during the six months ended June 30, 2017 and 2016, respectively, related to this project. As of June 30, 2017, the Company had incurred a total of $73.4 million of costs for this project. The total estimated cost of this project, including equipment costs, is estimated to be approximately $105.0 million. The project is expected to be completed in late 2018.

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Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

NOTE 18 - SUBSEQUENT EVENTS

In July 2017, the Company used the proceeds from the sale of Trinity to pay down $4.2 million of additional principal on the Term Loan Facility and $10.4 million of principal on the ABL Credit Facility.

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Guarantor and Non-Guarantor Supplemental Information

6 Months Ended

Jun. 30, 2017

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Guarantor and Non-Guarantor Supplemental Information

NOTE 19 - GUARANTOR AND NON-GUARANTOR SUPPLEMENTAL INFORMATION

The Senior Notes are senior unsecured obligations of the Company guaranteed on a senior basis by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries (the “Guarantors”). The Senior 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 when a sale of all of the subsidiary guarantor’s assets used in operations occurs.

These condensed consolidating and combining 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 the accompanying condensed consolidated and combined financial statements of the Company, except as follows:

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

• Due to Parent and Due from Parent are presented gross in the supplemental condensed consolidating and combining balance sheets.

• Investments in consolidated subsidiaries, as well as guarantor subsidiaries’ investments in non-guarantor subsidiaries, are presented under the equity method of accounting with the related investments presented within the line items net investment in subsidiaries and other long-term liabilities in the supplemental condensed consolidating and combining balance sheets.

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

Following the Spin-off, the Company’s intercompany activity consists primarily of daily cash transfers, the allocation of certain expenses and expenditures paid by the parent issuer on behalf of its subsidiaries, and the push down of investment in its subsidiaries. The parent issuer’s investment in its subsidiaries reflects the activity of the period beginning April 29, 2016 through June 30, 2017. Likewise, the parent issuer’s equity in earnings of unconsolidated affiliates represents the Company’s earnings for the same post-spin period.

Prior to the Spin-off, the Company’s intercompany activity consisted primarily of cash transfers and the allocation of certain expenses among the various subsidiaries, as well as the pushdown of the Guarantors’ investment in the subsidiary non-guarantors. Due to and due from Parent activity consist of the allocation of certain expenses and expenditures paid by CHS on behalf of QHC entities.

The Company’s subsidiaries generally do not purchase services from one another; thus, the intercompany and due to and due from parent activity do not represent revenue generating transactions. Intercompany transactions eliminate in consolidation.

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	455,874		$	129,341		$	—		$	585,215
Provision for bad debts		—			48,050			7,019			—			55,069
Net operating revenues		—			407,824			122,322			—			530,146
Operating costs and expenses:
Salaries and benefits		—			182,437			82,872			—			265,309
Supplies		—			45,403			18,709			—			64,112
Other operating expenses		2,892			124,634			30,087			—			157,613
Depreciation and amortization		—			17,591			2,995			—			20,586
Rent		—			7,064			5,088			—			12,152
Electronic health records incentives earned		—			(1,981	)		204			—			(1,777	)
Legal, professional and settlement costs		—			3,934			—			—			3,934
Impairment of long-lived assets and goodwill		—			12,900			—			—			12,900
Loss (gain) on sale of hospitals, net		—			—			(4,321	)		—			(4,321	)
Transaction costs related to the Spin-off		—			—			—			—			—
Total operating costs and expenses		2,892			391,982			135,634			—			530,508
Income (loss) from operations		(2,892	)		15,842			(13,312	)		—			(362	)
Interest expense, net		31,349			(970	)		79			—			30,458
Equity in earnings of affiliates		(3,344	)		2,554			—			790			—
Income (loss) before income taxes		(30,897	)		14,258			(13,391	)		(790	)		(30,820	)
Provision for (benefit from) income taxes		(267	)		(140	)		162			—			(245	)
Net income (loss)		(30,630	)		14,398			(13,553	)		(790	)		(30,575	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			55			—			55
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	14,398		$	(13,608	)	$	(790	)	$	(30,630	)

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	446,968		$	151,195		$	—		$	598,163
Provision for bad debts		—			51,551			16,875			—			68,426
Net operating revenues		—			395,417			134,320			—			529,737
Operating costs and expenses:
Salaries and benefits		—			178,375			86,511			—			264,886
Supplies		—			44,788			19,348			—			64,136
Other operating expenses		—			126,539			36,646			—			163,185
Depreciation and amortization		—			25,774			5,689			—			31,463
Rent		—			6,870			5,675			—			12,545
Electronic health records incentives earned		—			(3,995	)		(252	)		—			(4,247	)
Legal, professional and settlement costs		—			5,447			—			—			5,447
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			857			320			—			1,177
Total operating costs and expenses		—			598,255			190,737			—			788,992
Income (loss) from operations		—			(202,838	)		(56,417	)		—			(259,255	)
Interest expense, net		20,641			7,960			675			—			29,276
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(212,558	)		(57,092	)		218,811			(288,531	)
Provision for (benefit from) income taxes		(2,740	)		(33,952	)		(7,873	)		—			(44,565	)
Net income (loss)		(234,952	)		(178,606	)		(49,219	)		218,811			(243,966	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,095			—			1,095
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(178,606	)	$	(50,314	)	$	218,811		$	(245,061	)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	904,874		$	268,286		$	—		$	1,173,160
Provision for bad debts		—			97,609			17,765			—			115,374
Net operating revenues		—			807,265			250,521			—			1,057,786
Operating costs and expenses:
Salaries and benefits		—			363,459			166,452			—			529,911
Supplies		—			91,276			36,658			—			127,934
Other operating expenses		2,892			253,944			64,201			—			321,037
Depreciation and amortization		—			36,119			6,587			—			42,706
Rent		—			14,162			10,092			—			24,254
Electronic health records incentives earned		—			(3,438	)		(791	)		—			(4,229	)
Legal, professional and settlement costs		—			4,469			—			—			4,469
Impairment of long-lived assets and goodwill		—			16,200			—			—			16,200
Loss (gain) on sale of hospitals, net		—			—			(5,191	)		—			(5,191	)
Transaction costs related to the Spin-off		—			23			8			—			31
Total operating costs and expenses		2,892			776,214			278,016			—			1,057,122
Income (loss) from operations		(2,892	)		31,051			(27,495	)		—			664
Interest expense, net		59,933			(2,026	)		81			—			57,988
Equity in earnings of affiliates		(5,091	)		5,132			—			(41	)		—
Income (loss) before income taxes		(57,734	)		27,945			(27,576	)		41			(57,324	)
Provision for (benefit from) income taxes		457			222			(223	)		—			456
Net income (loss)		(58,191	)		27,723			(27,353	)		41			(57,780	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			411			—			411
Net income (loss) attributable to Quorum Health Corporation	$	(58,191	)	$	27,723		$	(27,764	)	$	41		$	(58,191	)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	906,715		$	305,932		$	—		$	1,212,647
Provision for bad debts		—			99,906			33,453			—			133,359
Net operating revenues		—			806,809			272,479			—			1,079,288
Operating costs and expenses:
Salaries and benefits		—			350,577			171,171			—			521,748
Supplies		—			89,569			38,228			—			127,797
Other operating expenses		—			257,998			69,650			—			327,648
Depreciation and amortization		—			51,264			11,356			—			62,620
Rent		—			13,891			11,203			—			25,094
Electronic health records incentives earned		—			(7,994	)		(461	)		—			(8,455	)
Legal, professional and settlement costs		—			5,688			—			—			5,688
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			3,655			1,257			—			4,912
Total operating costs and expenses		—			978,248			339,204			—			1,317,452
Income (loss) from operations		—			(171,439	)		(66,725	)		—			(238,164	)
Interest expense, net		20,641			33,500			2,587			—			56,728
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(206,699	)		(69,312	)		218,811			(294,892	)
Provision for (benefit from) income taxes		(2,740	)		(32,410	)		(11,089	)		—			(46,239	)
Net income (loss)		(234,952	)		(174,289	)		(58,223	)		218,811			(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,410			—			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(174,289	)	$	(59,633	)	$	218,811		$	(250,063	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(30,630	)	$	14,398	$	(13,553	)	$	(790	)	$	(30,575	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		120			120		—			(120	)		120
Comprehensive income (loss)		(30,510	)		14,518		(13,553	)		(910	)		(30,455	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		55			—			55
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(30,510	)	$	14,518	$	(13,608	)	$	(910	)	$	(30,510	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(178,606	)	$	(49,219	)	$	218,811	$	(243,966	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(182,416	)		(49,219	)		222,621		(247,776	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,095			—		1,095
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(182,416	)	$	(50,314	)	$	222,621	$	(248,871	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(58,191	)	$	27,723	$	(27,353	)	$	41		$	(57,780	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		242			242		—			(242	)		242
Comprehensive income (loss)		(57,949	)		27,965		(27,353	)		(201	)		(57,538	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		411			—			411
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(57,949	)	$	27,965	$	(27,764	)	$	(201	)	$	(57,949	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(174,289	)	$	(58,223	)	$	218,811	$	(248,653	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(178,099	)		(58,223	)		222,621		(252,463	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,410			—		1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(178,099	)	$	(59,633	)	$	222,621	$	(253,873	)

Condensed Consolidating and Combining Balance Sheet

June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	15,030		$	7,001		$	374		$	—		$	22,405
Patient accounts receivable, net of allowance for doubtful accounts		—			322,135			87,082			—			409,217
Inventories		—			44,616			9,653			—			54,269
Prepaid expenses		100			21,733			5,808			—			27,641
Due from third-party payors		—			92,387			4,785			—			97,172
Current assets of hospitals held for sale		—			5,813			—			—			5,813
Other current assets		—			33,562			14,767			—			48,329
Total current assets		15,130			527,247			122,469			—			664,846
Intercompany receivable		3			217,985			171,744			(389,732	)		—
Property and equipment, net		—			584,791			126,687			—			711,478
Goodwill		—			244,192			165,589			—			409,781
Intangible assets, net		—			69,616			8,078			—			77,694
Long-term assets of hospitals held for sale		—			14,365			16			—			14,381
Other long-term assets		—			86,889			22,432			—			109,321
Net investment in subsidiaries		1,495,140			—			—			(1,495,140	)		—
Total assets	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	1,395		$	254		$	—		$	1,649
Accounts payable		46			148,826			21,990			—			170,862
Accrued liabilities:
Accrued salaries and benefits		—			68,200			26,181			—			94,381
Accrued interest		10,142			—			—			—			10,142
Due to third-party payors		—			37,584			1,297			—			38,881
Current liabilities of hospitals held for sale		—			1,391			—			—			1,391
Other current liabilities		340			33,934			12,889			—			47,163
Total current liabilities		10,528			291,330			62,611			—			364,469
Long-term debt		1,260,089			24,301			331			—			1,284,721
Intercompany payable		60,885			172,970			155,877			(389,732	)		—
Deferred income tax liabilities, net		31,729			—			—			—			31,729
Other long-term liabilities		—			175,295			30,198			(63,737	)		141,756
Total liabilities		1,363,231			663,896			249,017			(453,469	)		1,822,675
Redeemable noncontrolling interests		—			—			5,614			—			5,614
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		541,774			1,290,232			460,414			(1,750,646	)		541,774
Accumulated other comprehensive income (loss)		(2,518	)		(2,518	)		—			2,518			(2,518	)
Accumulated deficit		(392,217	)		(206,525	)		(110,200	)		316,725			(392,217	)
Total Quorum Health Corporation stockholders' equity		147,042			1,081,189			350,214			(1,431,403	)		147,042
Nonredeemable noncontrolling interests		—			—			12,170			—			12,170
Total equity		147,042			1,081,189			362,384			(1,431,403	)		159,212
Total liabilities and equity	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501

Condensed Consolidating and Combining Balance Sheet

December 31, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	21,609		$	3,498		$	348		$	—		$	25,455
Patient accounts receivable, net of allowance for doubtful accounts		—			277,155			103,530			—			380,685
Inventories		—			46,318			11,806			—			58,124
Prepaid expenses		—			17,874			5,154			—			23,028
Due from third-party payors		—			109,793			6,442			—			116,235
Current assets of hospitals held for sale		—			1,502			—			—			1,502
Other current assets		—			41,673			16,269			—			57,942
Total current assets		21,609			497,813			143,549			—			662,971
Intercompany receivable		3			126,035			84,827			(210,865	)		—
Property and equipment, net		—			624,457			109,443			—			733,900
Goodwill		—			252,433			164,400			—			416,833
Intangible assets, net		—			73,404			11,578			—			84,982
Long-term assets of hospitals held for sale		—			6,851			—			—			6,851
Other long-term assets		—			72,967			15,866			—			88,833
Net investment in subsidiaries		1,485,213			—			—			(1,485,213	)		—
Total assets	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	3,819		$	1,560		$	304		$	—		$	5,683
Accounts payable		158			147,521			22,005			—			169,684
Accrued liabilities:
Accrued salaries and benefits		—			69,896			28,907			—			98,803
Accrued interest		19,915			—			—			—			19,915
Due to third-party payors		—			40,595			1,942			—			42,537
Current liabilities of hospitals held for sale		—			492			—			—			492
Other current liabilities		—			46,002			7,266			—			53,268
Total current liabilities		23,892			306,066			60,424			-			390,382
Long-term debt		1,215,836			24,899			407			-			1,241,142
Intercompany payable		34,495			86,084			90,286			(210,865	)		—
Deferred income tax liabilities, net		31,474			—			—			—			31,474
Other long-term liabilities		—			144,950			22,651			(58,605	)		108,996
Total liabilities		1,305,697			561,999			173,768			(269,470	)		1,771,994
Redeemable noncontrolling interests		—			—			6,807			—			6,807
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		537,911			1,333,347			412,705			(1,746,052	)		537,911
Accumulated other comprehensive income (loss)		(2,760	)		(2,760	)		-			2,760			(2,760	)
Accumulated deficit		(334,026	)		(238,626	)		(78,058	)		316,684			(334,026	)
Total Quorum Health Corporation stockholders' equity		201,128			1,091,961			334,647			(1,426,608	)		201,128
Nonredeemable noncontrolling interests		—			—			14,441			—			14,441
Total equity		201,128			1,091,961			349,088			(1,426,608	)		215,569
Total liabilities and equity	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(68,468	)	$	52,472		$	7,041		$	—		$	(8,955	)
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(13,390	)		(25,752	)		—			(39,142	)
Capital expenditures for software		—			(2,670	)		(499	)		—			(3,169	)
Acqusitions, net of cash acquired		—			(20	)		(1,867	)		—			(1,887	)
Proceeds from the sale of hospitals		—			—			20,156			—			20,156
Changes in intercompany balances with affiliates, net		—			(30,637	)		—			30,637			—
Net cash provided by (used in) investing activities		—			(46,717	)		(7,962	)		30,637			(24,042	)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net		50,000			—			—			—			50,000
Borrowings of long-term debt		—			72			—			—			72
Repayments of long-term debt		(10,832	)		(835	)		(180	)		—			(11,847	)
Payments of debt issuance costs		(2,938	)		—			—			—			(2,938	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			(1,489	)		—			—			(1,489	)
Cash distributions to noncontrolling investors		—			—			(3,851	)		—			(3,851	)
Changes in intercompany balances with affiliates, net		25,659			—			4,978			(30,637	)		—
Net cash provided by (used in) financing activities		61,889			(2,252	)		947			(30,637	)		29,947
Net change in cash and cash equivalents		(6,579	)		3,503			26			—			(3,050	)
Cash and cash equivalents at beginning of period		21,609			3,498			348			—			25,455
Cash and cash equivalents at end of period	$	15,030		$	7,001		$	374		$	—		$	22,405

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(3,759	)	$	87,812		$	(22,860	)	$	—		$	61,193
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(29,216	)		(3,991	)		—			(33,207	)
Capital expenditures for software		—			(2,426	)		(1,378	)		—			(3,804	)
Other investing activities		—			2,509			(1,107	)		—			1,402
Changes in intercompany balances with affiliates, net		—			(82,211	)		—			82,211			—
Net cash provided by (used in) investing activities		—			(111,344	)		(6,476	)		82,211			(35,609	)
Cash flows from financing activities:
Borrowings of long-term debt		1,255,464			56			—			—			1,255,520
Repayments of long-term debt		(2,200	)		(1,777	)		(300	)		—			(4,277	)
Increase (decrease) in Due to Parent, net		—			25,183			—			—			25,183
Payments of debt issuance costs		(28,003	)		—			—			—			(28,003	)
Cash paid to Parent related to the Spin-off		(1,217,336	)		—			—			—			(1,217,336	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			27			—			—			27
Cash distributions to noncontrolling investors		—			—			(2,647	)		—			(2,647	)
Purchases of shares from noncontrolling investors		—			—			(12	)		—			(12	)
Changes in intercompany balances with affiliates, net		47,996			—			34,215			(82,211	)		—
Net cash provided by (used in) financing activities		55,921			23,489			31,256			(82,211	)		28,455
Net change in cash and cash equivalents		52,162			(43	)		1,920			—			54,039
Cash and cash equivalents at beginning of period		—			524			582			—			1,106
Cash and cash equivalents at end of period	$	52,162		$	481		$	2,502		$	—		$	55,145

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation (Policies)

Basis of Presentation

The condensed consolidated and combined financial statements and accompanying notes of the Company presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). In the opinion of the Company’s management, the condensed consolidated and combined financial information presented herein includes all adjustments necessary to present fairly the results of operations, financial position and cash flows of the Company for the interim periods presented. Results of operations for interim periods should not be considered indicative of the results of operations expected for the full year ending December 31, 2017. Certain information and disclosures have been condensed or omitted as presented herein and as permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim period presentation. The Company’s management believes the financial statements and disclosures presented herein are adequate in order to make the information presented not misleading. The condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and accompanying notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 12, 2017 (the “2016 Form 10-K”).

Prior to its separation from CHS on April 29, 2016, QHC did not operate as a separate company and stand-alone financial statements were not historically prepared; however, QHC was comprised of certain stand-alone legal entities for which discrete financial information was available under CHS’ ownership. The accompanying condensed consolidated and combined financial statements include amounts and disclosures for QHC that have been derived from the consolidated financial statements and accounting records of CHS for the periods prior to the Spin-off in combination with the amounts and disclosures related to the stand-alone financial statements and accounting records of QHC after the Spin-off. The accompanying condensed consolidated and combined financial statements may not necessarily be indicative of the results of operations, financial position and cash flows of QHC in the future or those that would have occurred had the Company operated on a stand-alone basis during the entirety of the periods presented herein. See Note 16 — Related Party Transactions for additional information on the carve-out of financial information from CHS.

The Company’s financial statements have been prepared under the assumption that it will continue as a going concern. The Company has limited stand-alone operating history and has experienced net losses in each of the quarters subsequent to the Spin-off from CHS. On December 31, 2016, the Company adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements — Going Concern, which requires management to evaluate if there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern. As a result of adopting ASU No. 2014-15, management was required to evaluate the Company’s ability to comply with the Secured Net Leverage Ratio under its Senior Credit Facility for one year following the issuance of the financial statements for the six month period ended June 30, 2017. Although the Company was in compliance with its financial covenants as of June 30, 2017, the new standard requires management to base its evaluation about the ability to continue to comply with those covenants on results and events considered “probable” of occurring considering historical results, implemented plans, and executed agreements as of the date the financial statements are issued. In light of (i) the Company’s historical net operating results; (ii) delays in the approval by Centers for Medicare & Medicaid Services (“CMS”) of the California Hospital Quality Assurance Fee (“HQAF”) program for the 2017 to 2019 program period, which impacts the Company due to the inability to recognize any earned revenues until CMS approval of the program has been issued; and (iii) the amount of net operating losses from hospitals the Company intends to divest, management amended certain provisions of its Senior Credit Facility.

On April 11, 2017, the Company executed an agreement with its Senior Credit Facility lenders to amend certain provisions of its Senior Credit Facility (the “CS Amendment”) to, among other things, raise the maximum Secured Net Leverage Ratio (as defined in the credit agreement (the “CS Agreement”), among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent) to 4.75x from 4.25x for the period July 1, 2017 to December 31, 2018 (which was previously 4.25x for the period July 1, 2017 to June 30, 2018), at which point it drops to 4.00x for the remainder of the agreement. The CS Amendment also provides for additional Consolidated EBITDA add-backs under the covenant calculation for certain items. For additional information related to the CS Amendment, see Note 7 — Long-term Debt. Management has concluded that the CS Amendment alleviates any substantial doubt about its ability to continue as a going concern for the one year period following the issuance of its financial statements for the six month period ended June 30, 2017. The Company is actively engaged in initiatives to divest underperforming hospitals and outpatient facilities, for which proceeds will be used to pay down the Company’s term loan under its credit facility.

For all defined terms related to the Company’s Senior Credit Facility, see Note 7 – Long-term Debt.

Principles of Consolidation and Combination (Policies)

Principles of Consolidation and Combination

The consolidated and combined financial statements include the accounts of the Company and its subsidiaries in which it holds either a direct or indirect ownership of a majority voting interest. Investments in less-than-wholly-owned consolidated subsidiaries of QHC are presented separately in the equity component of the consolidated and combined balance sheets to distinguish between the interests of QHC and the interests of the noncontrolling investors. Revenues and expenses from these subsidiaries are included in the respective individual line items of the Company’s consolidated and combined statements of income, and net income is presented both in total and separately to distinguish the amounts attributable to the Company and the amounts attributable to the interests of the noncontrolling investors. Noncontrolling interests that are redeemable, or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company, are presented in mezzanine equity in the consolidated and combined balance sheets.

Intercompany transactions and accounts of the Company are eliminated in consolidation. Additionally, all significant transactions with CHS that occurred prior to the Spin-off were included in the consolidated and combined balance sheets within Due to Parent, net. This liability to CHS was settled in the Spin-off.

Reclassifications (Policies)

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

In the third quarter of 2016, the Company reclassified and separately presented certain items in its consolidated and combined statements of cash flows. Specifically, changes in self-insurance reserves related to employee health, professional and general liability and workers’ compensation liability were reclassified to changes in reserves for self-insurance claims, net of payments, and changes in reserves for legal, professional and settlement costs were reclassified to changes in reserves for legal, professional and settlement costs, net of payments. The Company believes the current presentation more accurately distinguishes the changes in these liabilities from changes in operating assets and liabilities considered to be part of its normal business operations. Both items are included in cash flows from operating activities.

Use of Estimates (Policies)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated and combined financial statements and accompanying notes. Actual results could differ from those estimates under different assumptions or conditions.

Revenue Recognition (Policies)

Revenue Recognition

The Company recognizes revenues from patient services at its hospitals and affiliated outpatient facilities in the period services are performed and reports these revenues at the net realizable amount expected to be collected from patients and third-party payors. Billings and collections are outsourced to CHS under the transition services agreements that were entered into in connection with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements.

The amounts collected for patient services are generally less than established billing rates, or standard billing charges, due to contractual agreements with third-party payors, governmental programs that require reduced billing rates, discounts offered as incentives for payment, and a portion related to bad debts. The Company recognizes revenues related to its QHR business when management advisory and consulting services are provided and reports these revenues at the net realizable amount expected to be collected from the non-affiliated hospital clients.

Payor Sources

The primary sources of payment for patient healthcare services are third-party payors, including federal and state agencies administering the Medicare and Medicaid programs, other governmental agencies, managed care health plans, commercial insurance companies, workers’ compensation carriers and employers. Self-pay revenues are the portion of patient service revenues derived from patients who do not have health insurance coverage and the patient responsibility portion of services that are not covered by health insurance plans. Non-patient revenues primarily include revenues from QHR’s hospital management advisory and consulting services business, rental income and hospital cafeteria sales.

Contractual Allowances and Discounts

The net realizable amount of patient service revenues due from third-party payors is subject to complexities and interpretations of payor-specific contractual agreements and governmental regulations that are frequently changing. The Medicare and Medicaid programs, which represent a large portion of the Company’s operating revenues, are highly complex programs to administer and are subject to interpretation of federal and state-specific reimbursement rates, new legislation and final cost report settlements. Contractual allowances, or differences in standard billing rates and the payments derived from contractual terms with governmental and non-governmental third–party payors, are recorded based on management’s best estimates in the period in which services are performed and a payment methodology is established with the patient. Recorded estimates for past contractual allowances are subject to change, in large part, due to ongoing contract negotiations and regulation changes, which are typical in the U.S. healthcare industry. Revisions to estimates are recorded as contractual allowance adjustments in the periods in which they become known and may be subject to further revisions. Self-pay and other payor discounts are incentives offered to uninsured or underinsured payors to reduce their costs of healthcare services with the purpose of maximizing the Company’s collection efforts.

Third-Party Program Reimbursements

Cost report settlements under reimbursement programs with Medicare, Medicaid and other managed care plans are estimated and recorded in the period the related services are performed and are adjusted in future periods, as needed, until the final cost report settlements are determined.Previous program reimbursements and final cost report settlements are included in due from and due to third-party payors in the consolidated and combined balance sheets. Previously, these amounts were a component of other current assets and other current liabilities in the consolidated and combined balance sheets. Contractual allowance adjustments related to previous program reimbursements and final cost report settlements favorably (unfavorably) impacted net operating revenues $1.4 million and $(2.5) million during the three months ended June 30, 2017 and 2016, respectively, and less than $(0.1) million and $(4.4) million during the six months ended June 30, 2017 and 2016, respectively.

Currently, several states utilize supplemental payment programs, including disproportionate share programs, for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from CMS and are funded with a combination of federal and state resources, including, in certain instances, taxes, fees or other program expenses (collectively, “provider taxes”) levied on the providers. Similar programs are also currently being considered by other states. These amounts are included in due from and due to third-party payors in the consolidated and combined balance sheets.

After a state supplemental payment program is approved and fully authorized by the appropriate state legislative or governmental agency, the Company recognizes revenue and related expenses based on the terms of the program in the period in which amounts are estimable and revenue collection is reasonably assured. The revenues earned by the Company under these programs are included in net operating revenues and the expenses associated with these programs are included in other operating expenses in the consolidated and combined statements of income.

The California Department of Health Care Services implemented the HQAF program, imposing a fee on certain general and acute care California hospitals. Revenues generated from these fees provide funding for the non-federal supplemental payments to California hospitals that serve California’s Medi-Cal and uninsured patients. Under the most recent phase of the program, covering the period January 2014 through December 2016, the Company recognized $11.3 million of Medicaid revenues and $2.7 million of provider taxes for the three months ended June 30, 2016 and $22.3 million of Medicaid revenues and $5.4 million of provider taxes for the six months ended June 30, 2016. The current program expired on December 31, 2016 and CMS has not approved a new program. Consistent with the first four phases of the HQAF program, the Company is not recognizing revenues under the pending program in 2017 or thereafter until CMS completes the approval process.

Charity Care

In the ordinary course of business, the Company provides services to patients who are financially unable to pay for hospital care. The related charges for those patients who are financially unable to pay that otherwise do not qualify for reimbursement from a governmental program are classified as charity care. The Company determines amounts that qualify for charity care primarily based on the patient’s household income relative to the poverty level guidelines established by the federal government. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges are recorded in operating revenues at the standard billing rates and fully offset in contractual allowances in the same period. The gross amounts of charity care revenues were $7.5 million and $7.0 million for the three months ended June 30, 2017 and 2016, respectively, and $20.0 million and $14.8 million for the six months ended June 30, 2017 and 2016, respectively.

Accounts Receivable and Allowance for Doubtful Accounts (Policies)

Accounts Receivable and Allowance for Doubtful Accounts

Substantially all of the Company’s receivables are related to providing healthcare services to patients at its hospitals and affiliated outpatient facilities.

Accounts receivable are reduced by an allowance for amounts that could become uncollectible in the future. The Company estimates the allowance for doubtful accounts by reserving a percentage of all self-pay accounts receivable without regard to aging category. The allowance percentage is based on a model that considers the historical write-off activity and is adjusted for expected recoveries and any anticipated changes in trends. The Company’s ability to estimate the allowance for doubtful accounts is not significantly impacted by the aging of accounts receivable, as management believes that substantially all of the risk exists at the point in time such accounts are identified as self-pay. For insured receivables, which are the non-self-pay receivables, the Company estimates the allowance for doubtful accounts based on a model that considers the uncontractualized portion of all accounts aging over 365 days from the date of patient discharge, reduced by an estimate for recoveries.

Collections are impacted by the economic ability of patients to pay, the effectiveness of CHS’ billing and collection efforts, including their current policies on collections, and the ability of the Company to further attempt collection efforts. Billings and collections are outsourced to CHS under the transition services agreements that were established with the Spin-off. See Note 16 — Related Party Transactions for additional information on these agreements. Significant changes in payor mix, centralized business office operations, including the CHS shared service centers’ efforts in collecting the Company’s accounts receivable, economic conditions or trends in federal and state governmental healthcare coverage, among others, could affect the Company’s estimates of accounts receivable collectability. The Company also continually reviews its overall allowance adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues after the provision for bad debts, as well as by analyzing current period net operating revenues and admissions by payor classification, aged accounts receivable by payor, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables, and the impact of recent acquisitions and divestitures.

Concentration of Credit Risk (Policies)

Concentration of Credit Risk

The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s hospitals and affiliated facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s markets and non-governmental third-party payors, Medicare represents a significant concentration of credit risk from payors. Accounts receivable, net of contractual allowances, from Medicare were $73.4 million and $72.6 million, or 9.8% and 9.8% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. Additionally, due to fiscal problems in the state of Illinois, the Company believes Illinois Medicaid represents a concentration of credit risk. The Company’s accounts receivable, net of contractual allowances, from Illinois Medicaid were $47.6 million and $34.8 million, or 6.4% and 4.7% of total patient accounts receivable, net as of June 30, 2017 and December 31, 2016, respectively. The Company’s state supplemental program receivables from Illinois Medicaid were $18.1 million and $16.6 million, or 18.6% and 14.3% of total due from third-party payors, as of June 30, 2017 and December 31, 2016, respectively.

The Company’s revenues are particularly sensitive to regulatory and economic changes in certain states where the Company generates significant revenues. Accordingly, any changes in the current demographic, economic, competitive or regulatory conditions in certain states in which revenues are significant could have an adverse effect on the Company’s results of operations, financial condition or cash flows. Changes to Medicaid and other government-managed payor programs in these states, including reductions in reimbursement rates or delays in reimbursement payments under state supplemental payment or other programs, could also have a similar adverse effect.

Other Operating Expenses (Policies)

Other Operating Expenses

Following the Spin-off, the Company began recording costs associated with the transition services agreements and other ancillary agreements with CHS in accordance with the terms of these agreements. These costs, which primarily include the costs of providing information technology, patient billing and collections and payroll services, are included in “Transition services agreements and allocations from Parent” in the table above. Amounts allocated to the Company by CHS for periods prior to the Spin-off are also included in “Transition services agreements and allocations from Parent” in the table above.

Prior to the Spin-off, QHC recorded a monthly corporate management fee from CHS that represented a portion of CHS’ corporate office costs, and this fee was included in other operating expenses. Following the Spin-off, the costs for corporate office functions are primarily included in salaries and benefits expenses in the consolidated and combined statements of income.

See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

General and Administrative Costs (Policies)

General and Administrative Costs

Substantially all of the Company’s operating costs and expenses are “cost of revenues” items. Operating expenses that could be classified as general and administrative by the Company are costs related to corporate office functions, including, but not limited to tax, treasury, audit, risk management, legal, investor relations and human resources. These costs are primarily salaries and benefits expenses associated with these corporate office functions. General and administrative costs of the Company were $14.5 million and $11.7 million during the three months ended June 30, 2017 and 2016, respectively, and $30.1 million and $23.7 million during the six months ended June 30, 2017 and 2016, respectively. Prior to the Spin-off, the majority of these costs were allocations from CHS. See Note 16 — Related Party Transactions for additional information on the allocated costs from CHS.

Electronic Health Records Incentives Earned (Policies)

Electronic Health Records Incentives Earned

Pursuant to the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the Company is eligible to receive incentive payments under the Medicare and Medicaid programs for its eligible hospitals and physician clinics that demonstrate meaningful use of certified Electronic Health Records (“EHR”) technology. Each of the Company’s eligible hospitals and physician clinics has completed the initial adoption phase of EHR implementation and is currently in the process of implementing the remaining two phases.EHR incentive payments are subject to audit and potential recoupment if it is determined that the applicable meaningful use standards were not met. EHR incentive payments are also subject to retrospective adjustment because the cost report data upon which the incentive payments are based are further subject to audit.

The Company utilizes a gain contingency model to recognize EHR incentive payments. When the recognition criteria have been fully met, the Company recognizes the income from EHR incentives payments as a part of operating costs and expenses in the consolidated and combined statements of income. Medicaid EHR incentive payments are calculated based on prior period Medicare cost report information available at the time when eligible hospitals demonstrate meaningful use of certified EHR technology. Medicare EHR incentive payments are calculated when eligible hospitals demonstrate meaningful use of certified EHR technology and the information for the applicable full Medicare cost report year used to determine the final incentive payment is available. In some instances, the Company may receive estimated Medicare EHR incentive payments prior to when the Medicare cost report information used to determine the final incentive payment is available. In these instances, recognition of the income from EHR incentive payments is deferred until all recognition criteria are met. The Company recognizes receivables for EHR incentive payments that have been earned, but are uncollected at period end, as other current assets in the consolidated and combined balance sheets. The receivables are adjusted for any known audit or retrospective adjustments related to prior periods. Deferred revenue from EHR incentive payments is recorded in other current liabilities in the consolidated and combined balance sheets.

The Company incurs both capital expenditures and operating expenses in connection with the implementation of EHR technology initiatives. The amounts and timing of these expenditures does not directly correlate with the timing of the Company’s receipt or recognition of EHR incentive payments as earned. As the Company completes its full implementation of certified EHR technology in accordance with all three phases of the program, its EHR incentive payments will decline and ultimately end.

Legal, Professional and Settlement Costs (Policies)

Legal, Professional and Settlement Costs

Legal, professional and settlement costs in the consolidated and combined statements of income primarily include legal costs and related settlements, if any, related to regulatory claims, government investigations into reimbursement payments and claims associated with QHR’s hospital management contracts. Professional costs include legal costs for investigations, data gathering and analysis associated with investigation projects approved by the Company’s Board of Directors (the “Board”).

Loss (Gain) on Sale of Hospitals, Net (Policies)

Loss (Gain) on Sale of Hospitals, Net

Loss (gain) on sale of hospitals, net is the loss (gain) related to the Company’s divestiture of hospitals and their related outpatient facilities. It is calculated as the difference between the cash received from the sale and the carrying value of the associated net assets at the date of sale, less certain incremental direct selling costs.

Transaction Costs Related to the Spin-off (Policies)

Transaction Costs Related to the Spin-off

Transaction costs related to the Spin-off consists of QHC’s portion of the costs to effect the Spin-off and the costs associated with forming a new company. These costs include audit, management advisory and consulting costs, investment advisory costs, legal expenses and other miscellaneous costs.

Income Taxes (Policies)

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income. To the extent the Company believes that recovery is not likely, a valuation allowance is established. To the extent the Company establishes a valuation allowance or increases this allowance, the related expense is included in the provision for income taxes in the consolidated and combined statements of income. The Company classifies interest and penalties, if any, related to its tax positions as a component of income tax expense. See Note 11 — Income Taxes for information on the separate return method of accounting for income taxes that was used by the Company during the carve-out period.

Cash and Cash Equivalents (Policies)

Cash and Cash Equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments with a maturity of three months or less from the date acquired that are subject to an insignificant risk of change in value.

Inventories (Policies)

Inventories

Inventories, primarily consisting of medical supplies and drugs, are stated at the lower of cost or market on a first-in, first-out basis.

Property and Equipment (Policies)

Property and Equipment

Purchases of property and equipment are recorded at cost. Property and equipment acquired in a business combination are recorded at estimated fair value. Routine maintenance and repairs are expensed as incurred. Expenditures that increase capacities or extend useful lives are capitalized. The Company capitalizes interest related to financing of major capital additions with the respective asset. Depreciation is recognized using the straight-line method over the estimated useful life of an asset. The Company depreciates land improvements over 3 to 20 years, buildings and improvements over 5 to 40 years, and equipment and fixtures over 3 to 18 years. The Company also leases certain facilities and equipment under capital lease obligations. These assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the asset. Property and equipment assets that are held for sale are not depreciated.

Goodwill (Policies)

Goodwill

The Company’s hospital operations and QHR’s hospital management advisory and consulting services operations meet the criteria to be classified as reporting units for goodwill. Goodwill was initially determined for QHC’s hospital operations reporting unit based on a relative fair value approach as of September 30, 2013 (CHS’ goodwill impairment testing date). Additional goodwill was allocated on a similar basis for four hospitals acquired by CHS in 2014 and included in the group of hospitals spun-off to QHC. For the QHR reporting unit, goodwill was allocated based on the amount recorded by CHS at the time of its acquisition in 2007. All subsequent goodwill generated from hospital, physician practice or other ancillary business acquisitions is recorded at fair value at the time of acquisition.

Intangible Assets (Policies)

Intangible Assets

The Company’s intangible assets primarily consist of purchase and development costs of software for internal use and contract-based intangible assets, including physician guarantee contracts, medical licenses, hospital management contracts, non-compete agreements and certificates of need. There are no expected residual values related to the Company’s intangible assets. Capitalized software costs are generally amortized over three years, except for software costs for significant system conversions, which are amortized over 8 to 10 years. Costs incurred to renew certain contract-based intangibles, such as hospital management contracts and certificates of need, would be recognized as intangible assets and amortized over the respective renewed contract periods. Capitalized software costs that are in the development stage are not amortized until the related projects are complete. Assets for physician guarantee contracts, hospital management contracts, non-compete agreements and certificates of need are amortized over the life of the individual contracts. Intangible assets held for sale are not amortized.

Impairment of Long-Lived Assets and Goodwill (Policies)

Impairment of Long-Lived Assets and Goodwill

Whenever an event occurs or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, the Company projects the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the carrying values are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimated fair value based on valuation techniques available in the circumstances.

Goodwill arising from business combinations is not amortized. Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. The fair value of the related reporting units is estimated using both a discounted cash flow model as well as a multiple model based on earnings before interest, taxes, depreciation and amortization. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s best estimate of a market participant’s weighted-average cost of capital. Both models are based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions of the Company.

See Note 3 — Impairment of Long-Lived Assets and Goodwill for additional information related to impairment charges recorded in the condensed consolidated and combined statements of income for the six months ended June 30, 2017 and the year ended December 31, 2016.

Professional and General Liability and Workers’ Compensation Liability Insurance Reserves (Policies)

Professional and General Liability and Workers’ Compensation Liability Insurance Reserves

As part of the business of owning and operating hospitals, the Company is subject to legal actions alleging liability on its part. To mitigate a portion of this risk, the Company maintains insurance exceeding a self-insured retention level for these types of claims. The Company’s self-insurance reserves reflect the current estimate of all outstanding losses, including incurred but not reported losses, based on actuarial calculations as of period end. The loss estimates included in the actuarial calculations may change in the future based on updated facts and circumstances. The Company’s insurance expense includes the actuarially determined estimate of losses for the current year, including claims incurred but not reported, the change in the estimate of losses for prior years based upon actual claims development experience as compared to prior actuarial projections, the insurance premiums for losses in excess of the Company’s self-insured retention levels, the administrative costs of the insurance programs, and interest expense related to the discounted portion of the liability. The Company’s reserves for professional and general liability and workers’ compensation claims are based on semi-annual actuarial calculations, which are discounted to present value and consider historical claims data, demographic factors, severity factors and other actuarial assumptions. The reserves for self-insured claims are discounted based on the Company’s risk-free interest rate that corresponds to the period when the self-insured claims are incurred and projected to be paid.

See Note 17 — Commitments and Contingencies for information related to the portion of the Company’s insurance reserves for workers’ compensation liability and professional and general liability that are indemnified by CHS and the related accounting treatment and presentation in the consolidated and combined financial statements.

Self-Insured Employee Health Benefits

The Company is self-insured for substantially all of the medical benefits of its employees. The Company maintains a liability for its current estimate of incurred but not reported employee health claims based on historical claims data provided by third-party administrators. The undiscounted reserve for self-insured employee health benefits was $9.4 million and $11.0 million as of June 30, 2017 and December 31, 2016, respectively and is included in accrued salaries and benefits in the consolidated and combined balance sheets. Expense each period is based on the actual claims received during the period plus any adjustment to the liability.

Prior to the Spin-off, QHC was allocated employee health expense as part of the monthly corporate overhead charges from CHS. The allocation was determined based on claims made by QHC employees during the period plus an estimate for the change in liability related to QHC employee health claims incurred but not reported. The liability was included in Due to Parent, net in the consolidated and combined balance sheets, as the related employee health insurance policy was owned by CHS. Employee health expense is included in salaries and benefits expenses in the consolidated and combined statements of income for all periods. See Note 16 — Related Party Transactions for additional information on corporate overhead costs from CHS prior to the Spin-off.

Redeemable and Non-Redeemable Noncontrolling Interests (Policies)

Redeemable and Non-RedeemableNoncontrolling Interests

The Company’s consolidated and combined financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that it controls. Certain of the Company’s consolidated subsidiaries have noncontrolling physician ownership interests with redemption features that require the Company to deliver cash upon the occurrence of certain events outside its control, such as the retirement, death, or disability of a physician-owner. The carrying amount of redeemable noncontrolling interests is recorded in the consolidated and combined balance sheets at the greater of: (1) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of cumulative net income (loss), net of cumulative amounts distributed, if any, or (2) the redemption value.

Assets and Liabilities of Hospitals Held for Sale (Policies)

Assets and Liabilities of Hospitals Held for Sale

The Company reports separately from other assets on the consolidated and combined balance sheet those assets that meet the criteria for classification as held for sale. Generally, assets that meet the criteria include those for which the carrying amount will be settled principally through a sale transaction rather than through continuing use. The asset must be available for immediate sale in its present condition, subject to usual or customary terms, and the sale must be probable to occur in the next 12 months. Similarly, the liabilities of a disposal group are classified as held for sale upon meeting these criteria. Immediately following classification as held for sale, the Company remeasures these assets and liabilities and adjusts the value to the lesser of the carrying amount or fair value less costs to sell. The assets and liabilities classified as held for sale are no longer depreciated or amortized into expense. The carrying value of assets classified as held for sale are reported net of impairment charges in the consolidated and combined balance sheets.

Stock-Based Compensation (Policies)

Stock-Based Compensation

In connection with the Spin-off, the Company issued QHC restricted stock awards to all CHS restricted stock award holders as of the Record Date. Each holder of CHS restricted stock awards received one QHC restricted stock award for every four CHS restricted stock awards held. In addition, QHC employees that held CHS restricted stock awards were allowed to continue to hold the CHS awards under the same terms and conditions that existed prior to the Spin-off, excluding certain shares granted on March 1, 2016 that were canceled in connection with the Spin-off. The unrecognized compensation expense related to the vesting of the CHS restricted stock awards held by QHC employees was transferred to QHC with the Spin-off. As a result, the Company is responsible for recording stock-based compensation expense attributable to the unvested portion of CHS restricted stock awards held by QHC employees and the unvested portion of all QHC restricted stock awards held by its employees, consisting of both QHC awards issued on the Record Date and additional awards granted under the Quorum Health Corporation 2016 Stock Award Plan (the “2016 Stock Award Plan”) following the Spin-off.

Following the Spin-off, the Company accounts for stock-based compensation in accordance with Accounting Standards Codification Topic 718, “Compensation — Stock Compensation.” Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service periods. Determining the fair value of stock-based awards at the grant date requires the exercise of judgment, including the number of stock-based awards that are expected to be forfeited. If actual forfeitures differ from the Company’s estimates, stock-based compensation expense and the Company’s results of operations would be impacted

See Note 14 — Stock-Based Compensation for additional information related to stock-based compensation.

Benefit Plans (Policies)

Benefit Plans

Following the Spin-off, the Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, for which certain of the Company’s subsidiaries are the plan sponsors. The rights and obligations of these plans were transferred from CHS to the Company, pursuant to the Separation and Distribution Agreement. Prior to the Spin-off, QHC was allocated a portion of CHS’ benefit costs under its defined contribution plans. The allocation was based on specific identification for plans associated exclusively with QHC hospitals and on QHC’s proportional share of employees covered under all other applicable plans. The expense was recorded as salaries and benefits in the consolidated and combined statements of income, and the cumulative liability for these benefit costs, which was transferred to the Company in the Spin-off, was recorded in Due to Parent, net in the consolidated and combined balance sheets.

QHC recognizes the unfunded liability of its defined benefit plan in other long-term liabilities in the consolidated and combined balance sheets. Unrecognized gains (losses) and prior service credits (costs) are recorded as changes in other comprehensive income (loss). The measurement date of the plan’s assets and liabilities coincides with the Company’s year end. The Company’s pension benefit obligation is measured using actuarial calculations that incorporate discount rates, rate of compensation increases and expected long-term returns on plan assets. The calculations additionally consider expectations related to the retirement age and mortality of plan participants. The Company records pension benefit costs related to all of its plans as salaries and benefits expenses in the consolidated and combined statements of income.

Segment Reporting (Policies)

Segment Reporting

The principal business of the Company is to provide healthcare services at its hospitals and outpatient facilities. The Company’s only other line of business is the hospital management advisory and consulting services it provides through QHR. The Company has determined that its hospital operations business meets the criteria for separate segment reporting. The financial information for QHR’s business does not meet the quantitative thresholds for separate segment reporting, and therefore has been combined with the Company’s corporate functions into the all other reportable segment. See Note 13 — Segments.

New Accounting Pronouncements (Policies)

New Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Accounting for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. This ASU instead permits an entity to recognize goodwill impairment loss as the excess of a reporting unit’s carrying value over the estimated fair value of the reporting unit, to the extent this amount does not exceed the carrying amount of goodwill. The new guidance continues to allow an entity to perform a qualitative assessment over goodwill impairment indicators in lieu of a quantitative assessment in certain situations. The ASU is effective for the Company’s annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated and combined results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation, which was issued to simplify some of the accounting guidance for share-based compensation. Among the areas impacted by the amendments in this ASU are the accounting for income taxes related to share-based payments, accounting for forfeitures, classification of awards as equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this ASU on January 1, 2017. The adoption of this ASU had no material impact on the Company’s consolidated and combined results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the accounting for leases, requiring lessees to recognize most leases on their balance sheet with a right-of-use asset and a lease liability. Leases will be classified as either finance or operating leases, which will impact the expense recognition of such leases over the lease term. The ASU also modifies the lease classification criteria for lessors and eliminates some of the real estate leasing guidance previously applied for certain leasing transactions. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt this ASU on January 1, 2019. The Company utilizes a number of leases to support its operations. As such, the adoption of this ASU is expected to have a significant impact on the Company’s consolidated and combined financial position. The Company is currently evaluating the quantitative and qualitative impact the adoption of this ASU will have on its operations, policies and procedures. The Company is additionally evaluating any modifications to its leasing strategy in response to the requirements of this standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides for a single comprehensive principles-based model for the recognition of revenue across all industries using a five-step model to recognize revenue from customer contracts. The new standard significantly expands disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows as well as certain additional quantitative and qualitative disclosures. The standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016, and permits the use of either a full or modified retrospective approach upon adoption. In preparation for adoption of the ASU, the Company has established an implementation team that is evaluating the current impact the new standard will have on its revenue recognition policies, procedures, financial position, results of operations, cash flows, financial disclosures and control framework. Specifically, the Company is quantifying the impact on its results of operations, financial position and cash flows in order to determine which method, either full or modified retrospective, to use upon adoption. The Company is using a program management approach for the various revenue streams to accomplish the revenue, financial reporting and organizational impact analysis according to project milestones to ensure a systematic and timely process that will allow consideration of impact findings in the selection and implementation of a transition method. The Company cannot reasonably estimate at this time the quantitative impact that the adoption of this accounting standard will have on its consolidated financial statements. The Company notes that industry guidance continues to develop and that further guidance regarding third-party reimbursements and other reimbursement programs unique to the healthcare industry may be issued in later 2017, which may impact our evaluation. In addition to new and expanded disclosures, the Company anticipates that the most significant impact will be to the presentation of the income statement, as the provision for doubtful accounts will be recorded as a direct reduction to revenues and will not be presented as a separate line item.

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Description of the Business and Spin-Off (Tables)

6 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Transactions to Effect the Spin-Off

The following table provides a summary of the major transactions to effect the Spin-off of QHC as a newly formed, independent company (dollars in thousands):

											Additional
	Long-Term			Due to			Common Stock				Paid-in			Parent's
	Debt			Parent, Net			Shares		Amount		Capital			Equity
Balance at April 29, 2016 (prior to the Spin-off)	$	24,179		$	1,813,836			—	$	—	$	—		$	3,137
Borrowings of long-term debt, net of debt issuance discounts		1,255,464			—			—		—		—			—
Payments of debt issuance costs		(29,146	)		—			—		—		—			—
Cash proceeds paid to Parent		—			(1,217,336	)		—		—		—			—
Transfer of liabilities from Parent		—			(22,292	)		—		—		—			—
Net deferred income tax liability resulting from the Spin-off		—			(46,783	)		—		—		—			—
Non-cash capital contribution from Parent		—			(527,425	)		—		—		530,562			(3,137	)
Distribution of common stock		—			—			27,719,645		3		(3	)		—
Distribution of restricted stock awards		—			—			692,409		—		—			—
Balance at April 29, 2016 (after the Spin-off)	$	1,250,497		$	—			28,412,054	$	3	$	530,559		$	—

Summary of Liabilities Transferred from Parent

The following table provides a summary of the liabilities transferred to QHC from CHS in connection with the Spin-off (in thousands):

	April 29, 2016
Accounts payable	$	13,607
Benefit plan liabilities		5,964
Other liabilities		2,721
Total liabilities transferred from Parent	$	22,292

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Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Components of Net Operating Revenues Before Provision for Bad Debts

The following table provides a summary of the components of net operating revenues, before the provision for bad debts (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating revenues	$	3,023,793		$	3,042,786		$	6,092,116		$	6,123,439
Less: Contractual allowances		(2,336,287	)		(2,335,554	)		(4,707,578	)		(4,696,589	)
Less: Discounts		(102,291	)		(109,069	)		(211,378	)		(214,203	)
Total net operating revenues, before the provision for bad debts	$	585,215		$	598,163		$	1,173,160		$	1,212,647

Summary of Net Operating Revenues, Before the Provision for Bad Debts, by Payor Source

The following tables provide a summary of net operating revenues, before the provision for bad debts, by payor source (dollars in thousands):

	Three Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	160,167		27.4	%	$	167,549		28.0	%
Medicaid		107,341		18.3	%		113,283		18.9	%
Managed care and commercial plans		238,448		40.7	%		230,595		38.6	%
Self-pay		55,310		9.5	%		59,171		9.9	%
Non-patient		23,949		4.1	%		27,565		4.6	%
Total net operating revenues, before the provision for bad debts	$	585,215		100.0	%	$	598,163		100.0	%
	Six Months Ended June 30,
	2017					2016
	$  Amount		% of Total			$  Amount		% of Total
Medicare	$	335,460		28.6	%	$	343,083		28.3	%
Medicaid		204,010		17.4	%		216,351		17.8	%
Managed care and commercial plans		470,005		40.0	%		474,879		39.2	%
Self-pay		114,390		9.8	%		123,925		10.2	%
Non-patient		49,295		4.2	%		54,409		4.5	%
Total net operating revenues, before the provision for bad debts	$	1,173,160		100.0	%	$	1,212,647		100.0	%

Summary of Components of Amounts Due from and Due to Third-Party Payors

The following table provides a summary of the components of amounts due from and due to third-party payors (in thousands):

	June 30,		December 31,
	2017		2016
Amounts due from third-party payors:
Previous program reimbursements and final cost report settlements	$	22,182	$	23,876
State supplemental payment programs		74,990		92,359
Total amounts due from third-party payors	$	97,172	$	116,235
Amounts due to third-party payors:
Previous program reimbursements and final cost report settlements	$	31,535	$	33,366
State supplemental payment programs		7,346		9,171
Total amounts due to third-party payors	$	38,881	$	42,537

Summary of Portion of Medicaid Reimbursements Attributable to State Supplemental Payment Programs

The following table provides a summary of the portion of Medicaid reimbursements attributable to state supplemental payment programs (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Medicaid revenues	$	46,381	$	55,105	$	91,678	$	107,320
Provider taxes and other expenses		17,230		18,604		34,123		38,030
Reimbursements attributable to state supplemental payment programs, net of expenses	$	29,151	$	36,501	$	57,555	$	69,290

Summary of Components of Patient Accounts Receivable Before Contractual Allowances Discounts and Allowance for Doubtful Accounts

The following table provides a summary of the components of patient accounts receivable, before contractual allowances, discounts and allowance for doubtful accounts (dollars in thousands):

	June 30, 2017					December 31, 2016
	$ Amount		% of Total			$ Amount		% of Total
Third-parties	$	2,119,455		77.3	%	$	1,930,103		74.6	%
Self-pay		621,630		22.7	%		656,373		25.4	%
Total patient accounts receivable, gross	$	2,741,085		100.0	%	$	2,586,476		100.0	%

Summary of Changes in Allowance for Doubtful Accounts

The following table provides a summary of the changes in the allowance for doubtful accounts (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	360,796
Provision for bad debts		115,374
Amounts written off, net of recoveries		(135,973	)
Balance at end of period	$	340,197

Summary of States in Which Company Generated More Than 5% of its Total Revenues

The following table provides a summary of the states in which the Company generated more than 5% of total net patient revenues, before the provision for bad debts, as determined in each period (dollars in thousands):

	Number of	Six Months Ended June 30,
	Hospitals at	2017					2016
	June 30, 2017	$  Amount		% of Total			$  Amount		% of Total
Illinois	9	$	414,132		36.8	%	$	399,049		34.5	%
Oregon	1		106,514		9.5	%		104,810		9.0	%
Georgia	2		88,276		7.9	%		107,469		9.3	%
California	2		81,238		7.2	%		101,562		8.8	%
Kentucky	3		61,443		5.5	%		59,375		5.1	%

Summary of Major Components of Other Operating Expenses

The following table provides a summary of the major components of other operating expenses (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Purchased services	$	43,843	$	44,636	$	89,439	$	90,120
Taxes and insurance		33,610		34,261		67,853		69,567
Medical specialist fees		28,888		25,182		57,351		49,532
Transition services agreements and allocations from Parent		15,986		17,841		32,268		34,098
Repairs and maintenance		9,759		10,730		21,202		21,966
Utilities		6,727		7,001		13,392		14,156
Management fees from Parent		—		2,966		—		11,792
Other miscellaneous operating expenses		18,800		20,568		39,532		36,417
Total other operating expenses	$	157,613	$	163,185	$	321,037	$	327,648

Summary of Activity Related to Electronic Health Records Incentives

The following table provides a summary of activity related to EHR incentives (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Electronic health records incentives receivable at beginning of period	$	5,578		$	5,885		$	4,189		$	11,227
Electronic health records incentives earned		1,777			608			4,229			4,816
Cash incentive payments received		(4,624	)		(5,124	)		(5,466	)		(12,749	)
Adjustments to receivable based on final cost report settlement or audit		(475	)		604			(696	)		(1,321	)
Electronic health records incentives receivable at end of period	$	2,256		$	1,973		$	2,256		$	1,973
Deferred revenue related to electronic health records incentives at beginning of period	$	—		$	(4,693	)	$	—		$	—
Cash received and deferred during period		(256	)		—			(256	)		(4,693	)
Recognition of deferred incentives as earned		—			3,639			—			3,639
Deferred revenue related to electronic health records incentives at end of period	$	(256	)	$	(1,054	)	$	(256	)	$	(1,054	)
Total electronic health records incentives earned during period	$	1,777		$	4,247		$	4,229		$	8,455
Total cash incentive payments received during period		4,880			5,124			5,722			17,442

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Property Plant And Equipment [Abstract]

Summary of Components of Property and Equipment

The following table provides a summary of the components of property and equipment (in thousands):

	June 30,			December 31,
	2017			2016
Property and equipment, at cost:
Land and improvements	$	76,830		$	84,474
Building and improvements		750,697			782,892
Equipment and fixtures		530,652			592,463
Construction in progress		78,228			60,146
Total property and equipment, at cost		1,436,407			1,519,975
Less: Accumulated depreciation and amortization		(724,929	)		(786,075	)
Total property and equipment, net	$	711,478		$	733,900

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Changes in Goodwill

The following table provides a summary of changes in goodwill (in thousands):

	Six Months Ended
	June 30, 2017
Balance at beginning of period	$	416,833
Acquisitions		1,202
Divestitures		(4,554	)
Reclassification to held-for-sale		(2,332	)
Impairment		(1,368	)
Balance at end of period	$	409,781

Summary of Intangible Assets

The following table provides a summary of intangible assets (in thousands):

	June 30,			December 31,
	2017			2016
Finite-lived intangible assets:
Capitalized software costs:
Cost	$	165,113		$	180,855
Accumulated amortization		(106,811	)		(118,391	)
Capitalized software costs, net		58,302			62,464
Physician guarantee contracts:
Cost		7,990			11,355
Accumulated amortization		(4,457	)		(6,329	)
Physician guarantee contracts, net		3,533			5,026
Other finite-lived intangible assets:
Cost		43,883			44,342
Accumulated amortization		(33,707	)		(33,059	)
Other finite-lived intangible assets, net		10,176			11,283
Total finite-lived intangible assets
Cost		216,986			236,552
Accumulated amortization		(144,975	)		(157,779	)
Total finite-lived intangible assets, net	$	72,011		$	78,773
Indefinite-lived intangible assets:
Tradenames	$	4,000		$	4,000
Medical licenses and other indefinite-lived intangible assets		1,683			2,209
Total indefinite-lived intangible assets	$	5,683		$	6,209
Total intangible assets:
Cost	$	222,669		$	242,761
Accumulated amortization		(144,975	)		(157,779	)
Total intangible assets, net	$	77,694		$	84,982

Summary of the Components of Amortization Expense

The following table provides a summary of the components of amortization expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Amortization of finite-lived intangible assets:
Capitalized software costs	$	3,796	$	6,730	$	8,539	$	13,325
Physician guarantee contracts		599		902		1,156		1,613
Other finite-lived intangible assets		556		759		1,126		1,516
Total amortization expense related to finite-lived intangible assets		4,951		8,391		10,821		16,454
Amortization of leasehold improvements and property and equipment assets held under capital lease obligations		882		610		1,338		1,293
Total amortization expense	$	5,833	$	9,001	$	12,159	$	17,747

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Summary of Components of Long-Term Debt

The following table provides a summary of the components of long-term debt (in thousands):

	June 30,			December 31,
	2017			2016
Senior Credit Facility:
Revolving Credit Facility, maturing 2021	$	—		$	—
Term Loan Facility, maturing 2022		857,587			868,419
ABL Credit Facility, maturing 2021		50,000			—
Senior Notes, maturing 2023		400,000			400,000
Unamortized debt issuance costs and discounts		(47,498	)		(48,764	)
Capital lease obligations		25,000			25,588
Other debt		1,281			1,582
Total debt		1,286,370			1,246,825
Less:  Current maturities of long-term debt		(1,649	)		(5,683	)
Total long-term debt	$	1,284,721		$	1,241,142

Summary of Maximum Secured Net Leverage Ratio Permitted Under Credit Facility

After giving effect to the CS Amendment, the maximum Secured Net Leverage Ratio permitted under the CS Agreement, as determined based on 12 month trailing Consolidated EBITDA and as defined in the CS Agreement, follows:

	Maximum
	Secured Net
Period	Leverage Ratio
Period from January 1, 2017 to June 30, 2017	4.50 to 1.00
Period from July 1, 2017 to December 31, 2018	4.75 to 1.00
Period from January 1, 2019 and thereafter	4.00 to 1.00

Summary of Redemption Dates and Prices of Senior Notes

The following table provides a summary of the redemption periods and prices related to the Senior Notes:

	Redemption
Period	Prices
Period from April 15, 2019 to April 14, 2020		108.719	%
Period from April 15, 2020 to April 14, 2021		105.813	%
Period from April 15, 2021 to April 14, 2022		102.906	%
Period from April 15, 2022 to April 14, 2023		100.000	%

Summary of Unamortized Debt Issuance Costs and Discounts

The following table provides a summary of unamortized debt issuance costs and discounts (in thousands):

	June 30,			December 31,
	2017			2016
Debt issuance costs	$	32,084		$	29,146
Debt discounts		24,536			24,536
Total debt issuance costs and discounts		56,620			53,682
Less:  Amortization of debt issuance costs and discounts		(9,122	)		(4,918	)
Total unamortized debt issuance costs and discounts	$	47,498		$	48,764

Summary of Debt Maturities for Next Five Years and Thereafter

The following table provides a summary of debt maturities for the next five years and thereafter (in thousands):

	June 30, 2017
Remainder of 2017	$	919
2018		7,820
2019		10,168
2020		10,251
2021		10,356
Thereafter		1,294,354
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868

Summary of Components of Interest Expense, Net

The following table provides a summary of the components of interest expense, net (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Senior Credit Facility:
Revolving Credit Facility	$	192		$	85		$	331		$	85
Term Loan Facility		16,642			10,432			31,283			10,432
ABL Credit Facility		613			82			869			82
Senior Notes		11,629			8,914			23,255			8,914
Amortization of debt issuance costs and discounts		2,224			1,191			4,204			1,191
All other interest expense (income), net		(842	)		(359	)		(1,954	)		210
Total interest expense, net, from long-term debt		30,458			20,345			57,988			20,914
Due to Parent, net		—			8,931			-			35,814
Total interest expense, net	$	30,458		$	29,276		$	57,988		$	56,728

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Other Long-Term Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Other Liabilities Disclosure [Abstract]

Summary of Components of Other Long-Term Liabilities

The following table provides a summary of the components of other long-term liabilities (in thousands):

	June 30,		December 31,
	2017		2016
Professional and general liability insurance reserves	$	80,005	$	74,194
Workers' compensation liability insurance reserves		20,164		17,416
Benefit plan liabilities		36,028		10,722
Deferred rent		3,492		4,001
Other miscellaneous long-term liabilities		2,067		2,663
Total other long-term liabilities	$	141,756	$	108,996

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Summary of Carrying Amounts and Estimated Fair Values of Long-Term Debt

The following table provides a summary of the carrying amounts and estimated fair values of the Company’s long-term debt (in thousands):

	June 30, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Revolving Credit Facility	$	—	$	—	$	—	$	—
Term Loan Facility		857,587		860,803		868,419		849,427
ABL Credit Facility		50,000		50,000		—		—
Senior Notes		400,000		355,980		400,000		334,720
Other debt		26,281		26,281		27,170		27,170
Total debt, excluding unamortized debt issuance costs and discounts	$	1,333,868	$	1,293,064	$	1,295,589	$	1,211,317

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Earnings (Loss) Per Share

The following table provides a summary of the computation of basic and diluted earnings (loss) per share (in thousands, except earnings per share and shares):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator:
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		55			1,095			411			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	(245,061	)	$	(58,191	)	$	(250,063	)
Denominator:
Weighted-average shares outstanding - basic and diluted		28,145,215			28,412,720			27,977,738			28,412,389
Basic and diluted earnings (loss) per share attributable to Quorum Health Corporation stockholders	$	(1.09	)	$	(8.63	)	$	(2.08	)	$	(8.80	)

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Segments (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Summary of Financial Information Related to Segments

The following tables provide a summary of financial information related to the Company’s segments (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Net operating revenues:
Hospital operations	$	509,118		$	508,906	$	1,015,536		$	1,036,317
All other		21,028			20,831		42,250			42,971
Total net operating revenues	$	530,146		$	529,737	$	1,057,786		$	1,079,288
Adjusted EBITDA:
Hospital operations	$	41,536		$	26,457	$	79,002		$	75,396
All other		(7,106	)		2,775		(18,430	)		10,060
Total Adjusted EBITDA	$	34,430		$	29,232	$	60,572		$	85,456

	June 30,		December 31,
	2017		2016
Assets:
Hospital operations	$	1,759,694	$	1,802,121
All other		227,807		192,249
Total assets	$	1,987,501	$	1,994,370

Summary of Reconciliation of Adjusted EBITDA to Net Income (Loss)

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), its most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Adjusted EBITDA	$	34,430		$	29,232		$	60,572		$	85,456
Interest expense, net		(30,458	)		(29,276	)		(57,988	)		(56,728	)
(Provision for) benefit from income taxes		245			44,565			(456	)		46,239
Depreciation and amortization		(20,586	)		(31,463	)		(42,706	)		(62,620	)
Legal, professional and settlement costs		(3,934	)		(5,447	)		(4,469	)		(5,688	)
Impairment of long-lived assets and goodwill		(12,900	)		(250,400	)		(16,200	)		(250,400	)
Gain (loss) on sale of hospitals, net		4,321			—			5,191			—
Transaction costs related to the Spin-off		—			(1,177	)		(31	)		(4,912	)
Post-spin headcount reductions		(1,693	)		—			(1,693	)		—
Net income (loss)	$	(30,575	)	$	(243,966	)	$	(57,780	)	$	(248,653	)

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Summary of Stock-Based Compensation Expense

The following table provides a summary of stock-based compensation expense (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Stock-based compensation resulting from the Spin-off	$	448	$	809	$	1,364	$	809
Stock-based compensation related to grants following the Spin-off		2,083		1,088		3,964		1,088
Total stock-based compensation expense	$	2,531	$	1,897	$	5,328	$	1,897

QHC Awards Distributed in Spin-off [Member]

Summary of Activity Related to Unvested Restricted Stock Awards

The following table provides a summary of the activity related to unvested QHC restricted stock awards held by QHC and CHS employees during the six months ended June 30, 2017 that were distributed in the Spin-off (in shares):

	QHC Awards Distributed in Spin-off
	QHC Employees			CHS Employees			Total
Unvested restricted stock awards at December 31, 2016		52,462			621,525			673,987
Vested		(34,009	)		(202,286	)		(236,295	)
Forfeited		(14,129	)		(138,844	)		(152,973	)
Unvested restricted stock awards at June 30, 2017		4,324			280,395			284,719

QHC Restricted Stock Awards Granted Following Spin-off [Member]

Summary of Activity Related to Unvested Restricted Stock Awards

The following table provides a summary of the activity related to unvested restricted stock awards during the six months ended June 30, 2017 that were granted to QHC employees subsequent to the Spin-off:

	QHC Awards Granted
	Subsequent to Spin-off
				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock awards at December 31, 2016		1,081,005		$	12.77
Granted		1,093,618			7.64
Vested		(282,582	)		12.77
Forfeited		(125,069	)		12.43
Unvested restricted stock awards at June 30, 2017		1,766,972			9.62

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Summary of Allocated Costs from Parent

The following table provides a summary of allocated costs to QHC from CHS (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016
Insurance costs	$	10,486	$	44,246
Management fees from Parent		2,966		11,792
All other allocated costs		5,305		25,021
Total related party operating costs and expenses	$	18,757	$	81,059

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Summary of Insurance Reserves Related to Professional and General Liability Claims and Workers' Compensation Claims

The following tables provide a summary of the Company’s insurance reserves related to professional and general liability claims and workers’ compensation liability claims, distinguished between those indemnified by CHS and those related to the Company’s self-insurance risks (in thousands):

	June 30, 2017
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	22,984	$	55,743	$	22,984	$	55,743
All other self-insurance reserves		—		—		1,417		24,262
Total insurance reserves for professional and general liability		22,984		55,743		24,401		80,005
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		3,498		16,808		3,498		16,808
All other self-insurance reserves		—		—		1,735		3,356
Total insurance reserves for workers' compensation liability		3,498		16,808		5,233		20,164
Total self-insurance reserves	$	26,482	$	72,551	$	29,634	$	100,169
	December 31, 2016
	Current		Long-Term		Current		Long-Term
	Receivable		Receivable		Liability		Liability
Professional and general liability:
Insurance reserves indemnified by CHS, Inc.	$	17,580	$	59,652	$	17,580	$	59,652
All other self-insurance reserves		—		—		230		14,542
Total insurance reserves for professional and general liability		17,580		59,652		17,810		74,194
Workers' compensation liability:
Insurance reserves indemnified by CHS, Inc.		4,863		15,958		4,863		15,958
All other self-insurance reserves		—		—		1,736		1,458
Total insurance reserves for workers' compensation liability		4,863		15,958		6,599		17,416
Total self-insurance reserves	$	22,443	$	75,610	$	24,409	$	91,610

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Guarantor and Non-Guarantor Supplemental Information (Tables)

6 Months Ended

Jun. 30, 2017

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Consolidating and Combining Statement of Income (Loss)

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	455,874		$	129,341		$	—		$	585,215
Provision for bad debts		—			48,050			7,019			—			55,069
Net operating revenues		—			407,824			122,322			—			530,146
Operating costs and expenses:
Salaries and benefits		—			182,437			82,872			—			265,309
Supplies		—			45,403			18,709			—			64,112
Other operating expenses		2,892			124,634			30,087			—			157,613
Depreciation and amortization		—			17,591			2,995			—			20,586
Rent		—			7,064			5,088			—			12,152
Electronic health records incentives earned		—			(1,981	)		204			—			(1,777	)
Legal, professional and settlement costs		—			3,934			—			—			3,934
Impairment of long-lived assets and goodwill		—			12,900			—			—			12,900
Loss (gain) on sale of hospitals, net		—			—			(4,321	)		—			(4,321	)
Transaction costs related to the Spin-off		—			—			—			—			—
Total operating costs and expenses		2,892			391,982			135,634			—			530,508
Income (loss) from operations		(2,892	)		15,842			(13,312	)		—			(362	)
Interest expense, net		31,349			(970	)		79			—			30,458
Equity in earnings of affiliates		(3,344	)		2,554			—			790			—
Income (loss) before income taxes		(30,897	)		14,258			(13,391	)		(790	)		(30,820	)
Provision for (benefit from) income taxes		(267	)		(140	)		162			—			(245	)
Net income (loss)		(30,630	)		14,398			(13,553	)		(790	)		(30,575	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			55			—			55
Net income (loss) attributable to Quorum Health Corporation	$	(30,630	)	$	14,398		$	(13,608	)	$	(790	)	$	(30,630	)

Condensed Consolidating and Combining Statement of Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	446,968		$	151,195		$	—		$	598,163
Provision for bad debts		—			51,551			16,875			—			68,426
Net operating revenues		—			395,417			134,320			—			529,737
Operating costs and expenses:
Salaries and benefits		—			178,375			86,511			—			264,886
Supplies		—			44,788			19,348			—			64,136
Other operating expenses		—			126,539			36,646			—			163,185
Depreciation and amortization		—			25,774			5,689			—			31,463
Rent		—			6,870			5,675			—			12,545
Electronic health records incentives earned		—			(3,995	)		(252	)		—			(4,247	)
Legal, professional and settlement costs		—			5,447			—			—			5,447
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			857			320			—			1,177
Total operating costs and expenses		—			598,255			190,737			—			788,992
Income (loss) from operations		—			(202,838	)		(56,417	)		—			(259,255	)
Interest expense, net		20,641			7,960			675			—			29,276
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(212,558	)		(57,092	)		218,811			(288,531	)
Provision for (benefit from) income taxes		(2,740	)		(33,952	)		(7,873	)		—			(44,565	)
Net income (loss)		(234,952	)		(178,606	)		(49,219	)		218,811			(243,966	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,095			—			1,095
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(178,606	)	$	(50,314	)	$	218,811		$	(245,061	)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	904,874		$	268,286		$	—		$	1,173,160
Provision for bad debts		—			97,609			17,765			—			115,374
Net operating revenues		—			807,265			250,521			—			1,057,786
Operating costs and expenses:
Salaries and benefits		—			363,459			166,452			—			529,911
Supplies		—			91,276			36,658			—			127,934
Other operating expenses		2,892			253,944			64,201			—			321,037
Depreciation and amortization		—			36,119			6,587			—			42,706
Rent		—			14,162			10,092			—			24,254
Electronic health records incentives earned		—			(3,438	)		(791	)		—			(4,229	)
Legal, professional and settlement costs		—			4,469			—			—			4,469
Impairment of long-lived assets and goodwill		—			16,200			—			—			16,200
Loss (gain) on sale of hospitals, net		—			—			(5,191	)		—			(5,191	)
Transaction costs related to the Spin-off		—			23			8			—			31
Total operating costs and expenses		2,892			776,214			278,016			—			1,057,122
Income (loss) from operations		(2,892	)		31,051			(27,495	)		—			664
Interest expense, net		59,933			(2,026	)		81			—			57,988
Equity in earnings of affiliates		(5,091	)		5,132			—			(41	)		—
Income (loss) before income taxes		(57,734	)		27,945			(27,576	)		41			(57,324	)
Provision for (benefit from) income taxes		457			222			(223	)		—			456
Net income (loss)		(58,191	)		27,723			(27,353	)		41			(57,780	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			411			—			411
Net income (loss) attributable to Quorum Health Corporation	$	(58,191	)	$	27,723		$	(27,764	)	$	41		$	(58,191	)

Condensed Consolidating and Combining Statement of Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Operating revenues, net of contractual allowances and discounts	$	—		$	906,715		$	305,932		$	—		$	1,212,647
Provision for bad debts		—			99,906			33,453			—			133,359
Net operating revenues		—			806,809			272,479			—			1,079,288
Operating costs and expenses:
Salaries and benefits		—			350,577			171,171			—			521,748
Supplies		—			89,569			38,228			—			127,797
Other operating expenses		—			257,998			69,650			—			327,648
Depreciation and amortization		—			51,264			11,356			—			62,620
Rent		—			13,891			11,203			—			25,094
Electronic health records incentives earned		—			(7,994	)		(461	)		—			(8,455	)
Legal, professional and settlement costs		—			5,688			—			—			5,688
Impairment of long-lived assets and goodwill		—			213,600			36,800			—			250,400
Transaction costs related to the Spin-off		—			3,655			1,257			—			4,912
Total operating costs and expenses		—			978,248			339,204			—			1,317,452
Income (loss) from operations		—			(171,439	)		(66,725	)		—			(238,164	)
Interest expense, net		20,641			33,500			2,587			—			56,728
Equity in earnings of affiliates		217,051			1,760			—			(218,811	)		—
Income (loss) before income taxes		(237,692	)		(206,699	)		(69,312	)		218,811			(294,892	)
Provision for (benefit from) income taxes		(2,740	)		(32,410	)		(11,089	)		—			(46,239	)
Net income (loss)		(234,952	)		(174,289	)		(58,223	)		218,811			(248,653	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			1,410			—			1,410
Net income (loss) attributable to Quorum Health Corporation	$	(234,952	)	$	(174,289	)	$	(59,633	)	$	218,811		$	(250,063	)

Schedule of Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(30,630	)	$	14,398	$	(13,553	)	$	(790	)	$	(30,575	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		120			120		—			(120	)		120
Comprehensive income (loss)		(30,510	)		14,518		(13,553	)		(910	)		(30,455	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		55			—			55
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(30,510	)	$	14,518	$	(13,608	)	$	(910	)	$	(30,510	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(178,606	)	$	(49,219	)	$	218,811	$	(243,966	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(182,416	)		(49,219	)		222,621		(247,776	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,095			—		1,095
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(182,416	)	$	(50,314	)	$	222,621	$	(248,871	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	(58,191	)	$	27,723	$	(27,353	)	$	41		$	(57,780	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		242			242		—			(242	)		242
Comprehensive income (loss)		(57,949	)		27,965		(27,353	)		(201	)		(57,538	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—		411			—			411
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(57,949	)	$	27,965	$	(27,764	)	$	(201	)	$	(57,949	)

Condensed Consolidating and Combining Statement of Comprehensive Income (Loss)

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
Net income (loss)	$	(234,952	)	$	(174,289	)	$	(58,223	)	$	218,811	$	(248,653	)
Amortization and recognition of unrecognized pension cost components, net of income taxes		(3,810	)		(3,810	)		—			3,810		(3,810	)
Comprehensive income (loss)		(238,762	)		(178,099	)		(58,223	)		222,621		(252,463	)
Less:  Comprehensive income (loss) attributable to noncontrolling interests		—			—			1,410			—		1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	$	(238,762	)	$	(178,099	)	$	(59,633	)	$	222,621	$	(253,873	)

Schedule of Condensed Consolidating and Combining Balance Sheet

Condensed Consolidating and Combining Balance Sheet

June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	15,030		$	7,001		$	374		$	—		$	22,405
Patient accounts receivable, net of allowance for doubtful accounts		—			322,135			87,082			—			409,217
Inventories		—			44,616			9,653			—			54,269
Prepaid expenses		100			21,733			5,808			—			27,641
Due from third-party payors		—			92,387			4,785			—			97,172
Current assets of hospitals held for sale		—			5,813			—			—			5,813
Other current assets		—			33,562			14,767			—			48,329
Total current assets		15,130			527,247			122,469			—			664,846
Intercompany receivable		3			217,985			171,744			(389,732	)		—
Property and equipment, net		—			584,791			126,687			—			711,478
Goodwill		—			244,192			165,589			—			409,781
Intangible assets, net		—			69,616			8,078			—			77,694
Long-term assets of hospitals held for sale		—			14,365			16			—			14,381
Other long-term assets		—			86,889			22,432			—			109,321
Net investment in subsidiaries		1,495,140			—			—			(1,495,140	)		—
Total assets	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	1,395		$	254		$	—		$	1,649
Accounts payable		46			148,826			21,990			—			170,862
Accrued liabilities:
Accrued salaries and benefits		—			68,200			26,181			—			94,381
Accrued interest		10,142			—			—			—			10,142
Due to third-party payors		—			37,584			1,297			—			38,881
Current liabilities of hospitals held for sale		—			1,391			—			—			1,391
Other current liabilities		340			33,934			12,889			—			47,163
Total current liabilities		10,528			291,330			62,611			—			364,469
Long-term debt		1,260,089			24,301			331			—			1,284,721
Intercompany payable		60,885			172,970			155,877			(389,732	)		—
Deferred income tax liabilities, net		31,729			—			—			—			31,729
Other long-term liabilities		—			175,295			30,198			(63,737	)		141,756
Total liabilities		1,363,231			663,896			249,017			(453,469	)		1,822,675
Redeemable noncontrolling interests		—			—			5,614			—			5,614
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		541,774			1,290,232			460,414			(1,750,646	)		541,774
Accumulated other comprehensive income (loss)		(2,518	)		(2,518	)		—			2,518			(2,518	)
Accumulated deficit		(392,217	)		(206,525	)		(110,200	)		316,725			(392,217	)
Total Quorum Health Corporation stockholders' equity		147,042			1,081,189			350,214			(1,431,403	)		147,042
Nonredeemable noncontrolling interests		—			—			12,170			—			12,170
Total equity		147,042			1,081,189			362,384			(1,431,403	)		159,212
Total liabilities and equity	$	1,510,273		$	1,745,085		$	617,015		$	(1,884,872	)	$	1,987,501

Condensed Consolidating and Combining Balance Sheet

December 31, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	21,609		$	3,498		$	348		$	—		$	25,455
Patient accounts receivable, net of allowance for doubtful accounts		—			277,155			103,530			—			380,685
Inventories		—			46,318			11,806			—			58,124
Prepaid expenses		—			17,874			5,154			—			23,028
Due from third-party payors		—			109,793			6,442			—			116,235
Current assets of hospitals held for sale		—			1,502			—			—			1,502
Other current assets		—			41,673			16,269			—			57,942
Total current assets		21,609			497,813			143,549			—			662,971
Intercompany receivable		3			126,035			84,827			(210,865	)		—
Property and equipment, net		—			624,457			109,443			—			733,900
Goodwill		—			252,433			164,400			—			416,833
Intangible assets, net		—			73,404			11,578			—			84,982
Long-term assets of hospitals held for sale		—			6,851			—			—			6,851
Other long-term assets		—			72,967			15,866			—			88,833
Net investment in subsidiaries		1,485,213			—			—			(1,485,213	)		—
Total assets	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	3,819		$	1,560		$	304		$	—		$	5,683
Accounts payable		158			147,521			22,005			—			169,684
Accrued liabilities:
Accrued salaries and benefits		—			69,896			28,907			—			98,803
Accrued interest		19,915			—			—			—			19,915
Due to third-party payors		—			40,595			1,942			—			42,537
Current liabilities of hospitals held for sale		—			492			—			—			492
Other current liabilities		—			46,002			7,266			—			53,268
Total current liabilities		23,892			306,066			60,424			-			390,382
Long-term debt		1,215,836			24,899			407			-			1,241,142
Intercompany payable		34,495			86,084			90,286			(210,865	)		—
Deferred income tax liabilities, net		31,474			—			—			—			31,474
Other long-term liabilities		—			144,950			22,651			(58,605	)		108,996
Total liabilities		1,305,697			561,999			173,768			(269,470	)		1,771,994
Redeemable noncontrolling interests		—			—			6,807			—			6,807
Equity:
Quorum Health Corporation stockholders' equity:
Preferred stock		—			—			—			—			—
Common stock		3			—			—			—			3
Additional paid-in capital		537,911			1,333,347			412,705			(1,746,052	)		537,911
Accumulated other comprehensive income (loss)		(2,760	)		(2,760	)		-			2,760			(2,760	)
Accumulated deficit		(334,026	)		(238,626	)		(78,058	)		316,684			(334,026	)
Total Quorum Health Corporation stockholders' equity		201,128			1,091,961			334,647			(1,426,608	)		201,128
Nonredeemable noncontrolling interests		—			—			14,441			—			14,441
Total equity		201,128			1,091,961			349,088			(1,426,608	)		215,569
Total liabilities and equity	$	1,506,825		$	1,653,960		$	529,663		$	(1,696,078	)	$	1,994,370

Schedule of Condensed Consolidating and Combining Statement of Cash Flows

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2017

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(68,468	)	$	52,472		$	7,041		$	—		$	(8,955	)
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(13,390	)		(25,752	)		—			(39,142	)
Capital expenditures for software		—			(2,670	)		(499	)		—			(3,169	)
Acqusitions, net of cash acquired		—			(20	)		(1,867	)		—			(1,887	)
Proceeds from the sale of hospitals		—			—			20,156			—			20,156
Changes in intercompany balances with affiliates, net		—			(30,637	)		—			30,637			—
Net cash provided by (used in) investing activities		—			(46,717	)		(7,962	)		30,637			(24,042	)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net		50,000			—			—			—			50,000
Borrowings of long-term debt		—			72			—			—			72
Repayments of long-term debt		(10,832	)		(835	)		(180	)		—			(11,847	)
Payments of debt issuance costs		(2,938	)		—			—			—			(2,938	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			(1,489	)		—			—			(1,489	)
Cash distributions to noncontrolling investors		—			—			(3,851	)		—			(3,851	)
Changes in intercompany balances with affiliates, net		25,659			—			4,978			(30,637	)		—
Net cash provided by (used in) financing activities		61,889			(2,252	)		947			(30,637	)		29,947
Net change in cash and cash equivalents		(6,579	)		3,503			26			—			(3,050	)
Cash and cash equivalents at beginning of period		21,609			3,498			348			—			25,455
Cash and cash equivalents at end of period	$	15,030		$	7,001		$	374		$	—		$	22,405

Condensed Consolidating and Combining Statement of Cash Flows

Six Months Ended June 30, 2016

(In Thousands)

	Parent Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(3,759	)	$	87,812		$	(22,860	)	$	—		$	61,193
Cash flows from investing activities:
Capital expenditures for property and equipment		—			(29,216	)		(3,991	)		—			(33,207	)
Capital expenditures for software		—			(2,426	)		(1,378	)		—			(3,804	)
Other investing activities		—			2,509			(1,107	)		—			1,402
Changes in intercompany balances with affiliates, net		—			(82,211	)		—			82,211			—
Net cash provided by (used in) investing activities		—			(111,344	)		(6,476	)		82,211			(35,609	)
Cash flows from financing activities:
Borrowings of long-term debt		1,255,464			56			—			—			1,255,520
Repayments of long-term debt		(2,200	)		(1,777	)		(300	)		—			(4,277	)
Increase (decrease) in Due to Parent, net		—			25,183			—			—			25,183
Payments of debt issuance costs		(28,003	)		—			—			—			(28,003	)
Cash paid to Parent related to the Spin-off		(1,217,336	)		—			—			—			(1,217,336	)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		—			27			—			—			27
Cash distributions to noncontrolling investors		—			—			(2,647	)		—			(2,647	)
Purchases of shares from noncontrolling investors		—			—			(12	)		—			(12	)
Changes in intercompany balances with affiliates, net		47,996			—			34,215			(82,211	)		—
Net cash provided by (used in) financing activities		55,921			23,489			31,256			(82,211	)		28,455
Net change in cash and cash equivalents		52,162			(43	)		1,920			—			54,039
Cash and cash equivalents at beginning of period		—			524			582			—			1,106
Cash and cash equivalents at end of period	$	52,162		$	481		$	2,502		$	—		$	55,145

XML

Description of the Business and Spin-Off (Narrative) (Details)			6 Months Ended
	Apr. 29, 2016 USD ($) Hospital $ / shares shares	Apr. 22, 2016 USD ($)	Jun. 30, 2017 USD ($) Hospital bed state $ / shares	Dec. 31, 2016 USD ($) $ / shares
Description Of Business And Spin Off [Line Items]
Number of hospitals owned or leased | Hospital			34
Number of licensed beds | bed			3,168
Number of States in which Entity Operates | state			16
Common stock, par value | $ / shares			$ 0.0001	$ 0.0001
Cash proceeds paid to Parent	$ 1,217,336,000
Debt Instrument, Unamortized Discount			$ 24,536,000	$ 24,536,000
Contributed capital, in excess of par value of common stock			541,774,000	$ 537,911,000
Senior Notes, maturing 2023 [Member]
Description Of Business And Spin Off [Line Items]
Debt Instrument, Face Amount		$ 400,000,000
Debt Instrument, Interest Rate, Stated Percentage		11.625%
Debt Instrument, Unamortized Discount		$ 6,900,000
Debt instrument issue discount percentage		1.734%
ABL Credit Facility, maturing 2021 [Member]
Description Of Business And Spin Off [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	125,000,000		$ 75,000,000
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member]
Description Of Business And Spin Off [Line Items]
Debt Instrument, Face Amount	880,000,000
Debt Instrument, Unamortized Discount	$ 17,600,000
Term Facility Issued Percentage on Par Value	98.00%
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member]
Description Of Business And Spin Off [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000,000
Spin-off from CHS [Member]
Description Of Business And Spin Off [Line Items]
Number of hospitals owned or leased | Hospital	38
Percentage ownership of number of stock shares held by the parent	100.00%
Common stock, par value | $ / shares	$ 0.0001
Record date for stockholders of the parent to be eligible to receive share distribution in spin-off	Apr. 22, 2016
Number of shares distributed to each stockholder in spin-off | shares	1
Number of shares held by each stockholder of the parent used to determine share distribution in spin-off | shares	4
Contributed capital, in excess of par value of common stock	$ 530,600,000
Cash contribution from parent	13,500,000
Cash contribution from parent for initial working capital	20,000,000
Differences in estimated and actual financing transaction fees for the Spin-off	$ 6,500,000
Sales Revenue, Segment [Member] | Segment Concentration Risk [Member] | Hospital Operations Reporting Unit [Member]
Description Of Business And Spin Off [Line Items]
Concentration risk, percentage			95.00%

XML

Description of the Business and Spin-Off - Summary of Transactions to Effect the Spin-Off (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 29, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Description Of Business And Spin Off [Line Items]
Long-Term Debt, balance at April 29, 2016 (prior to the spin-off)	$ 24,179			$ 1,241,142
Borrowings of long-term debt, net of debt issuance discounts	1,255,464
Payments of debt issuance costs	(29,146)	$ (2,891)	$ (28,003)	(2,938)	$ (28,003)
Long-Term Debt, balance at April 29, 2016 (after the spin-off)	1,250,497	1,284,721		1,284,721
Due to Parent, Net, balance at April 29, 2016 (prior to the spin-off)	1,813,836
Cash proceeds paid to Parent	(1,217,336)
Transfer of liabilities from Parent	(22,292)
Net deferred income tax liability resulting from the Spin-off	(46,783)
Non-cash capital contribution from Parent	(527,425)
Due to Parent, Net, balance at April 29, 2016 (after the spin-off)	$ 0
Stockholders' equity, beginning balance				$ 215,569	15,943
Stockholders' equity, beginning balance, shares				29,482,050
Stockholders' equity, ending balance		$ 159,212	293,651	$ 159,212	293,651
Stockholders' equity, ending balance, shares	28,412,054	30,297,524		30,297,524
Common Stock [Member]
Description Of Business And Spin Off [Line Items]
Stockholders' equity, beginning balance	$ 0			$ 3
Stockholders' equity, beginning balance, shares	0			29,482,050
Distribution of common stock	$ 3
Distribution of common stock, shares	27,719,645
Distribution of restricted stock awards	$ 0
Distribution of restricted stock awards, shares	692,409
Stockholders' equity, ending balance	$ 3	$ 3	$ 3	$ 3	$ 3
Stockholders' equity, ending balance, shares	28,412,054	30,297,524	29,489,247	30,297,524	29,489,247
Additional Paid-In Capital [Member]
Description Of Business And Spin Off [Line Items]
Stockholders' equity, beginning balance	$ 0			$ 537,911
Non-cash capital contribution from Parent	530,562
Distribution of common stock	(3)
Stockholders' equity, ending balance	530,559	$ 541,774	$ 520,336	$ 541,774	$ 520,336
Parent [Member]
Description Of Business And Spin Off [Line Items]
Stockholders' equity, beginning balance	3,137				$ 3,184
Non-cash capital contribution from Parent	(3,137)
Stockholders' equity, ending balance	$ 0

XML

Description of the Business and Spin-Off - Summary of Liabilities Transferred from Parent (Details) - Spin-off from CHS [Member] $ in Thousands	Apr. 29, 2016 USD ($)
Description Of Business And Spin Off [Line Items]
Total liabilities transferred from Parent	$ 22,292
Accounts Payable [Member]
Description Of Business And Spin Off [Line Items]
Total liabilities transferred from Parent	13,607
Benefit Plan Liabilities [Member]
Description Of Business And Spin Off [Line Items]
Total liabilities transferred from Parent	5,964
Other Liabilities [Member]
Description Of Business And Spin Off [Line Items]
Total liabilities transferred from Parent	$ 2,721

XML

Basis of Presentation and Significant Accounting Policies (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Hospital	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2014 Hospital	Mar. 31, 2017 USD ($)	Apr. 29, 2016 shares
Basis Of Presentation And Significant Accounting Policies [Line Items]
Increase (decrease) in net operating revenues during period for contractual allowance adjustments related to final cost report settlements on previous program reimbursements	$ 1,400,000	$ (2,500,000)		$ (4,400,000)
Operating revenues	3,023,793,000	3,042,786,000	$ 6,092,116,000	6,123,439,000
Provider taxes and other expenses	530,508,000	788,992,000	1,057,122,000	1,317,452,000
Accounts receivable, net of contractual allowances	409,217,000		409,217,000		$ 380,685,000
Due from third-party payors	97,172,000		97,172,000		116,235,000
General and administrative costs	14,500,000	11,700,000	$ 30,100,000	23,700,000
Acquired finite-lived intangible asset, residual value							$ 0
New date of annual goodwill impairment test			The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year.
Redeemable and non-redeemable noncontrolling interests			The Company’s consolidated and combined financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that it controls.
Maximum period during which assets held for sale sold			12 months
Spin-off from CHS [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of shares distributed to each stockholder in spin-off | shares								1
Number of shares held by each stockholder of the parent used to determine share distribution in spin-off | shares								4
Restricted Stock [Member] | Spin-off from CHS [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of shares distributed to each stockholder in spin-off | shares								1
Number of shares held by each stockholder of the parent used to determine share distribution in spin-off | shares								4
Accrued Salaries and Benefits [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Undiscounted reserve for self-insured employee health benefits	9,400,000		$ 9,400,000		$ 11,000,000
Capitalized Internal Use Software, Except Significant System Conversions [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Finite-lived intangible assets, useful life			3 years
Community Health Systems, Inc [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of Hospitals | Hospital						4
Illinois [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of Hospitals | Hospital			9
Accounts Receivable [Member] | Credit Concentration Risk [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Concentration risk, percentage			100.00%		100.00%
Sales Revenue, Net [Member] | Credit Concentration Risk [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Concentration risk, percentage			5.00%		5.00%
California Hospital Quality Assurance Fee [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Operating revenues		11,300,000		22,300,000
Provider taxes and other expenses		2,700,000		5,400,000
Charity Care [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Operating revenues	7,500,000	$ 7,000,000	$ 20,000,000	$ 14,800,000
Medicare [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Accounts receivable, net of contractual allowances	73,400,000		$ 73,400,000		$ 72,600,000
Medicare [Member] | Accounts Receivable [Member] | Credit Concentration Risk [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Concentration risk, percentage			9.80%		9.80%
Medicaid [Member] | Illinois [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Accounts receivable, net of contractual allowances	47,600,000		$ 47,600,000		$ 34,800,000
Medicaid [Member] | Credit Concentration Risk [Member] | Illinois [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Due from third-party payors	$ 18,100,000		$ 18,100,000		$ 16,600,000
Medicaid [Member] | Accounts Receivable [Member] | Credit Concentration Risk [Member] | Illinois [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Concentration risk, percentage			6.40%		4.70%
Medicaid [Member] | Supplemental Program Receivables [Member] | Credit Concentration Risk [Member] | Illinois [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Concentration risk, percentage			18.60%		14.30%
Maximum [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Increase (decrease) in net operating revenues during period for contractual allowance adjustments related to final cost report settlements on previous program reimbursements			$ (100,000)
Maximum [Member] | Capitalized Internal Use Software, Significant System Conversions [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Finite-lived intangible assets, useful life			10 years
Maximum [Member] | Land Improvements [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			20 years
Maximum [Member] | Buildings and Improvements [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			40 years
Maximum [Member] | Equipment and Fixtures [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			18 years
Minimum [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of days from date of discharge in which company establishes doubtful accounts reserve on non-self pay payor receivables			365 days
Minimum [Member] | Capitalized Internal Use Software, Significant System Conversions [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Finite-lived intangible assets, useful life			8 years
Minimum [Member] | Land Improvements [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			3 years
Minimum [Member] | Buildings and Improvements [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			5 years
Minimum [Member] | Equipment and Fixtures [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of asset			3 years
Senior Credit Facility [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Secured net leverage ratio	385.00%		385.00%		393.00%
Senior Credit Facility [Member] | Period from July 1, 2017 to December 31, 2018 [Member] | Maximum [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Secured net leverage ratio	475.00%		475.00%
Senior Credit Facility [Member] | Period from July 1, 2017 to June 30, 2018 [Member] | Maximum [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Secured net leverage ratio	425.00%		425.00%
Senior Credit Facility [Member] | Period from January 1, 2019 and thereafter [Member] | Maximum [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Secured net leverage ratio	400.00%		400.00%

XML

Basis of Presentation and Significant Accounting Policies (Summary of Components of Net Operating Revenues Before Provision for Bad Debts) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Health Care Organizations [Abstract]
Operating revenues	$ 3,023,793	$ 3,042,786	$ 6,092,116	$ 6,123,439
Less: Contractual allowances	(2,336,287)	(2,335,554)	(4,707,578)	(4,696,589)
Less: Discounts	(102,291)	(109,069)	(211,378)	(214,203)
Total net operating revenues, before the provision for bad debts	$ 585,215	$ 598,163	$ 1,173,160	$ 1,212,647

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Basis of Presentation and Significant Accounting Policies (Summary of Net Operating Revenues, Before the Provision for Bad Debts, by Payor Source) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 585,215	$ 598,163	$ 1,173,160	$ 1,212,647
Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Medicare [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 160,167	$ 167,549	$ 335,460	$ 343,083
Medicare [Member] | Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	27.40%	28.00%	28.60%	28.30%
Medicaid [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 107,341	$ 113,283	$ 204,010	$ 216,351
Medicaid [Member] | Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	18.30%	18.90%	17.40%	17.80%
Managed Care and Commercial Plans [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 238,448	$ 230,595	$ 470,005	$ 474,879
Managed Care and Commercial Plans [Member] | Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	40.70%	38.60%	40.00%	39.20%
Self-Pay [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 55,310	$ 59,171	$ 114,390	$ 123,925
Self-Pay [Member] | Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	9.50%	9.90%	9.80%	10.20%
Non-Patient [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Total net operating revenues, before the provision for bad debts	$ 23,949	$ 27,565	$ 49,295	$ 54,409
Non-Patient [Member] | Sales Revenue, Net [Member] | Payor Concentration Risk [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Concentration risk, percentage	4.10%	4.60%	4.20%	4.50%

XML

Basis of Presentation and Significant Accounting Policies (Summary of Components of Amounts Due from and Due to Third-Party Payors) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Due from third-party payors	$ 97,172	$ 116,235
Due to third-party payors	38,881	42,537
Previous Program Reimbursements and Final Cost Report Settlements [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Due from third-party payors	22,182	23,876
Due to third-party payors	31,535	33,366
State Supplemental Payment Programs [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Due from third-party payors	74,990	92,359
Due to third-party payors	$ 7,346	$ 9,171

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Basis of Presentation and Significant Accounting Policies (Summary of Portion of Medicaid Reimbursements Attributable to State Supplemental Payment Programs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Medicaid revenues	$ 3,023,793	$ 3,042,786	$ 6,092,116	$ 6,123,439
Provider taxes and other expenses	530,508	788,992	1,057,122	1,317,452
State Supplemental Payment Programs [Member]
Health Care Organization Receivable And Revenue Disclosures [Line Items]
Medicaid revenues	46,381	55,105	91,678	107,320
Provider taxes and other expenses	17,230	18,604	34,123	38,030
Reimbursements attributable to state supplemental payment programs, net of expenses	$ 29,151	$ 36,501	$ 57,555	$ 69,290

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Basis of Presentation and Significant Accounting Policies (Summary of Components of Patient Accounts Receivable Before Contractual Allowances Discounts and Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Total patient accounts receivable gross, Amount	$ 2,741,085	$ 2,586,476
Accounts Receivable [Member] | Credit Concentration Risk [Member]
Accounts Notes And Loans Receivable [Line Items]
Concentration risk, percentage	100.00%	100.00%
Third-Parties [Member]
Accounts Notes And Loans Receivable [Line Items]
Total patient accounts receivable gross, Amount	$ 2,119,455	$ 1,930,103
Third-Parties [Member] | Accounts Receivable [Member] | Credit Concentration Risk [Member]
Accounts Notes And Loans Receivable [Line Items]
Concentration risk, percentage	77.30%	74.60%
Self-Pay [Member]
Accounts Notes And Loans Receivable [Line Items]
Total patient accounts receivable gross, Amount	$ 621,630	$ 656,373
Self-Pay [Member] | Accounts Receivable [Member] | Credit Concentration Risk [Member]
Accounts Notes And Loans Receivable [Line Items]
Concentration risk, percentage	22.70%	25.40%

XML

Basis of Presentation and Significant Accounting Policies (Summary of Changes in Allowance for Doubtful Accounts) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Accounting Policies [Abstract]
Balance at beginning of period	$ 360,796
Provision for bad debts	115,374
Amounts written off, net of recoveries	(135,973)
Balance at end of period	$ 340,197

XML

Basis of Presentation and Significant Accounting Policies (Summary of States in Which Company Generated More Than 5% of its Total Revenues) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Hospital	Jun. 30, 2016 USD ($)
Concentration Risk [Line Items]
Total net operating revenues before the provision for bad debts, Amount	$ 530,146	$ 529,737	$ 1,057,786	$ 1,079,288
Illinois [Member]
Concentration Risk [Line Items]
Number of Hospitals | Hospital			9
Total net operating revenues before the provision for bad debts, Amount			$ 414,132	$ 399,049
Illinois [Member] | Sales Revenue, Net [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			36.80%	34.50%
Oregon [Member]
Concentration Risk [Line Items]
Number of Hospitals | Hospital			1
Total net operating revenues before the provision for bad debts, Amount			$ 106,514	$ 104,810
Oregon [Member] | Sales Revenue, Net [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			9.50%	9.00%
Georgia [Member]
Concentration Risk [Line Items]
Number of Hospitals | Hospital			2
Total net operating revenues before the provision for bad debts, Amount			$ 88,276	$ 107,469
Georgia [Member] | Sales Revenue, Net [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			7.90%	9.30%
California [Member]
Concentration Risk [Line Items]
Number of Hospitals | Hospital			2
Total net operating revenues before the provision for bad debts, Amount			$ 81,238	$ 101,562
California [Member] | Sales Revenue, Net [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			7.20%	8.80%
Kentucky [Member]
Concentration Risk [Line Items]
Number of Hospitals | Hospital			3
Total net operating revenues before the provision for bad debts, Amount			$ 61,443	$ 59,375
Kentucky [Member] | Sales Revenue, Net [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			5.50%	5.10%

XML

Basis of Presentation and Significant Accounting Policies (Summary of Major Components of Other Operating Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Operating Expenses [Line Items]
Taxes and insurance	$ 33,610	$ 34,261	$ 67,853	$ 69,567
Transition services agreements and allocations from Parent	15,986	17,841	32,268	34,098
Repairs and maintenance	9,759	10,730	21,202	21,966
Utilities	6,727	7,001	13,392	14,156
Other miscellaneous operating expenses	18,800	20,568	39,532	36,417
Total other operating expenses	157,613	163,185	321,037	327,648
Purchased Services [Member]
Other Operating Expenses [Line Items]
Professional fees	43,843	44,636	89,439	90,120
Medical Specialist Fees [Member]
Other Operating Expenses [Line Items]
Professional fees	$ 28,888	25,182	$ 57,351	49,532
Community Health Systems, Inc [Member] | Management Fees From Parent [Member]
Other Operating Expenses [Line Items]
Other operating expenses		$ 2,966		$ 11,792

XML

Basis of Presentation and Significant Accounting Policies (Summary of Activity Related to Electronic Health Records Incentives) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Electronic Health Records Incentives Earned [Abstract]
Electronic health records incentives receivable at beginning of period	$ 5,578	$ 5,885	$ 4,189	$ 11,227
Electronic health records incentives earned	1,777	608	4,229	4,816
Cash incentive payments received	(4,624)	(5,124)	(5,466)	(12,749)
Adjustments to receivable based on final cost report settlement or audit	(475)	604	(696)	(1,321)
Electronic health records incentives receivable at end of period	2,256	1,973	2,256	1,973
Deferred revenue related to electronic health records incentives at beginning of period	0	(4,693)	0	0
Cash received and deferred during period	(256)	0	(256)	(4,693)
Recognition of deferred incentives as earned	0	3,639	0	3,639
Deferred revenue related to electronic health records incentives at end of period	(256)	(1,054)	(256)	(1,054)
Total electronic health records incentives earned during period	1,777	4,247	4,229	8,455
Total cash incentive payments received during period	$ 4,880	$ 5,124	$ 5,722	$ 17,442

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Impairment of Long-Lived Assets and Goodwill (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Impaired Long Lived Assets And Goodwill [Line Items]
Impairment of long-lived assets and goodwill	$ 12,900			$ 250,400	$ 16,200	$ 250,400
Impairment of long-lived assets				45,400
Goodwill impairment charge					$ 1,368
Hospital Operations Reporting Unit [Member]
Impaired Long Lived Assets And Goodwill [Line Items]
Impairment of long-lived assets			$ 82,700
Goodwill impairment charge			2,700	200,000
Goodwill impaired adjustment to initial estimate amount			80,000
Additional recorded impairment of long-lived assets			$ 38,800
Hospitals Held for Sale [Member]
Impaired Long Lived Assets And Goodwill [Line Items]
Impairment of long-lived assets and goodwill	$ 12,900	$ 3,300
Impairment of long-lived assets		1,100
Impairment of capitalized software costs		800
Goodwill impairment charge		$ 1,400		$ 5,000

XML

Divestitures (Narrative) (Details) $ in Thousands					3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 07, 2017 bed	May 12, 2017 bed	Dec. 31, 2016 USD ($) bed	Dec. 01, 2016 USD ($) bed	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) bed	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sale of hospitals					$ 15,874	$ 0	$ 20,156	$ 0
Gain (loss) on sale of business					4,321	0	5,191	0
Impairment of long-lived assets					12,900	250,400	$ 16,200	250,400
Augusta, Georgia [Member] | Trinity Hospital of Augusta [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Disposal date							Jun. 30, 2017
Number of beds in hospital sold | bed							231
Proceeds from sale of hospitals							$ 15,900
Pre-tax gain (loss) from disposal of discontinued operation					(5,000)	(3,600)	$ (7,400)	(5,900)
Gain (loss) on sale of business					5,000
Augusta, Georgia [Member] | Trinity Hospital of Augusta [Member] | Property, Equipment and Capitalized Software [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Impairment of long-lived assets									$ 33,900
Sunbury, Pennsylvania [Member] | Definitive Agreement to Sell Sunbury Community Hospital [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Number of beds in hospital being sold | bed	70
Lock Haven, Pennsylvania [Member] | Definitive Agreement to Sell Lock Haven Hospital [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Number of beds in hospital being sold | bed	47
McKenzie, Tennessee [Member] | Definitive Agreement to Sell Bed In McKenzie Regional Hospital [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Number of beds in hospital being sold | bed		45
Lexington Tennessee [Member] | Definitive Agreement to Sell Bed In Henderson County Community Hospital [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Number of beds in hospital being sold | bed		45
Centre, Alabama [Member] | Cherokee Medical Center [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Disposal date							Mar. 31, 2017
Number of beds in hospital sold | bed							60
Proceeds from sale of hospitals							$ 4,300
Pre-tax gain (loss) from disposal of discontinued operation					(100)	(1,000)	(1,000)	(2,700)
Gain (loss) on sale of business							$ 300
Centre, Alabama [Member] | Cherokee Medical Center [Member] | Property, Equipment and Capitalized Software [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Impairment of long-lived assets									3,900	$ 2,000
Winder, Georgia | Barrow Regional Medical Center [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Disposal date							Dec. 31, 2016
Number of beds in hospital sold | bed			56
Proceeds from sale of hospitals			$ 6,600
Pre-tax gain (loss) from disposal of discontinued operation					(1,600)	(2,300)	$ (1,000)	(5,300)
Gain (loss) on sale of business									(1,200)
Winder, Georgia | Barrow Regional Medical Center [Member] | Property, Equipment and Capitalized Software [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Impairment of long-lived assets									4,000
Hamlet, North Carolina [Member] | Sandhills Regional Medical Center [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Disposal date							Dec. 01, 2016
Number of beds in hospital sold | bed				64
Proceeds from sale of hospitals				$ 7,200
Pre-tax gain (loss) from disposal of discontinued operation					$ 1,100	$ (800)	$ 400	$ (1,400)
Gain (loss) on sale of business									(1,000)
Hamlet, North Carolina [Member] | Sandhills Regional Medical Center [Member] | Property, Equipment and Capitalized Software [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Impairment of long-lived assets									$ 4,800

XML

Property and Equipment (Summary of Components of Property and Equipment) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Property Plant And Equipment [Line Items]
Total property and equipment, at cost	$ 1,436,407	$ 1,519,975
Less: Accumulated depreciation and amortization	(724,929)	(786,075)
Total property and equipment, net	711,478	733,900
Land and Improvements [Member]
Property Plant And Equipment [Line Items]
Total property and equipment, at cost	76,830	84,474
Building and improvements [Member]
Property Plant And Equipment [Line Items]
Total property and equipment, at cost	750,697	782,892
Equipment and Fixtures [Member]
Property Plant And Equipment [Line Items]
Total property and equipment, at cost	530,652	592,463
Construction in progress [Member]
Property Plant And Equipment [Line Items]
Total property and equipment, at cost	$ 78,228	$ 60,146

XML

Property and Equipment (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property Plant And Equipment [Abstract]
Depreciation expense	$ 14.8	$ 22.5	$ 30.5	$ 44.9
Assets held under capital lease obligations, at cost	29.2		29.2		$ 30.2
Assets held under capital lease obligations, net of accumulated amortization	$ 26.5		26.5		27.5
Purchases of property and equipment accrued in accounts payable			$ 6.6		$ 15.7

XML

Goodwill and Intangible Assets (Summary of Changes in Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill, beginning balance	$ 416,833
Acquisitions	1,202
Divestitures	(4,554)
Reclassification to held-for-sale	(2,332)
Impairment	(1,368)
Goodwill, ending balance	$ 409,781

XML

Goodwill and Intangible Assets (Goodwill Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Goodwill [Line Items]
Goodwill	$ 409,781	$ 416,833
Hospital Operations Reporting Unit [Member]
Goodwill [Line Items]
Goodwill	376,500	383,500
Hospital Management Advisory and Consulting Services Reporting Unit [Member]
Goodwill [Line Items]
Goodwill	$ 33,300	$ 33,300

XML

Goodwill and Intangible Assets (Summary of Intangible Assets ) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Cost	$ 216,986	$ 236,552
Accumulated amortization	(144,975)	(157,779)
Total finite-lived intangible assets, net	72,011	78,773
Total indefinite-lived intangible assets	5,683	6,209
Total intangible assets, gross	222,669	242,761
Total intangible assets, net	77,694	84,982
Trade Names [Member]
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	4,000	4,000
Medical Licenses and Other Indefinite-Lived Intangible Assets [Member]
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	1,683	2,209
Capitalized Software Costs [Member]
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Cost	165,113	180,855
Accumulated amortization	(106,811)	(118,391)
Total finite-lived intangible assets, net	58,302	62,464
Physician Income Guarantee Contracts [Member]
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Cost	7,990	11,355
Accumulated amortization	(4,457)	(6,329)
Total finite-lived intangible assets, net	3,533	5,026
Other Finite-Lived Intangible Assets [Member]
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items]
Cost	43,883	44,342
Accumulated amortization	(33,707)	(33,059)
Total finite-lived intangible assets, net	$ 10,176	$ 11,283

XML

Goodwill and Intangible Assets (Intangible Assets Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	$ 216,986	$ 236,552
Capitalized Software Costs in Development Stage [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	$ 3,400

XML

Goodwill and Intangible Assets (Summary of the Components of Amortization Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Total amortization expense related to finite-lived intangible assets	$ 4,951	$ 8,391	$ 10,821	$ 16,454
Amortization of leasehold improvements and property and equipment assets held under capital lease obligations	882	610	1,338	1,293
Total amortization expense	5,833	9,001	12,159	17,747
Capitalized Software Costs [Member]
Finite-Lived Intangible Assets [Line Items]
Total amortization expense related to finite-lived intangible assets	3,796	6,730	8,539	13,325
Physician Income Guarantee Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Total amortization expense related to finite-lived intangible assets	599	902	1,156	1,613
Other Finite-Lived Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Total amortization expense related to finite-lived intangible assets	$ 556	$ 759	$ 1,126	$ 1,516

XML

Goodwill and Intangible Assets (Amortization Expense Narrative) (Details)	6 Months Ended
	Jun. 30, 2017
Intangible Assets Except Software Costs and Physician Income Guarantee Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, weighted-average useful life	5 years

XML

Long-Term Debt (Summary of Components of Long-Term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Apr. 29, 2016	Apr. 27, 2016
Debt Instrument [Line Items]
Total debt, excluding debt issuance costs and discounts	$ 1,333,868	$ 1,295,589
Unamortized debt issuance costs and discounts	(47,498)	(48,764)
Capital lease obligations	25,000	25,588
Other debt	1,281	1,582
Total debt	1,286,370	1,246,825
Less: Current maturities of long-term debt	(1,649)	(5,683)
Long-term debt	1,284,721	1,241,142	$ 1,250,497	$ 24,179
Senior Notes, maturing 2023 [Member]
Debt Instrument [Line Items]
Total debt, excluding debt issuance costs and discounts	400,000	400,000
ABL Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Total debt, excluding debt issuance costs and discounts	50,000	0
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Total debt, excluding debt issuance costs and discounts	0	0
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member]
Debt Instrument [Line Items]
Total debt, excluding debt issuance costs and discounts	$ 857,587	$ 868,419

XML

Long-Term Debt (Narrative) (Details)	Apr. 29, 2016 Agreement
Debt Disclosure [Abstract]
Number of credit agreement	2

XML

Long-Term Debt (Senior Credit Facility Narrative) (Details) - USD ($)		6 Months Ended
	Apr. 29, 2016	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount		$ 24,536,000			$ 24,536,000
Senior Credit Facility [Member]
Debt Instrument [Line Items]
Secured net leverage ratio		385.00%			393.00%
Line of credit, additional borrowing capacity		$ 154,600,000
Secured net leverage ratio to exercise incremental term loan commitments description		Through December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments, as defined in the CS Agreement, only if the Secured Net Leverage Ratio, adjusted for the requested Incremental Term Loan borrowing, is below 3.35 to 1.00. After December 31, 2018, the Company may request to exercise Incremental Term Loan Commitments for the greater of $100 million or an amount which would produce a Secured Net Leverage Ratio of 3.35 to 1.00.
Leverage ratio to incur permitted additional debt description		Through December 31, 2018, the Company is allowed to incur Permitted Additional Debt, as defined in the CS Agreement, only if the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 4.50 to 1.00. After December 31, 2018, the Company may incur Permitted Additional Debt so long as the Total Leverage Ratio, adjusted for the Permitted Additional Debt, is below 5.50 to 1.00.
Letters of credit outstanding		$ 10,300,000
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 880,000,000
Debt Instrument, Unamortized Discount	$ 17,600,000
Term Facility Issued Percentage on Par Value	98.00%
Debt Instrument, Maturity Date		Apr. 29, 2022
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member] | CS Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	5.75%
Derivative, Floor Interest Rate	1.00%
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member] | CS Agreement [Member] | Alternate Base Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	4.75%
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member] | CS Amendment [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage		8.79%
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member] | CS Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		6.75%
Derivative, Floor Interest Rate		1.00%
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member] | CS Amendment [Member] | Alternate Base Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		5.75%
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000,000
Debt Instrument, Maturity Date		Apr. 29, 2021
Line of credit, outstanding balance		$ 0
Line of credit, borrowing capacity		$ 77,200,000
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member] | CS Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.75%
Derivative, Floor Interest Rate		0.00%
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member] | CS Amendment [Member] | Alternate Base Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.75%
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member] | Scenario Forecast [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 75,000,000	$ 87,500,000

XML

Long-Term Debt (Maximum Secured Net Leverage Ratio Permitted) (Details) - Senior Credit Facility [Member]	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Secured net leverage ratio	385.00%	393.00%
Period from January 1, 2017 to June 30, 2017 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Secured net leverage ratio	450.00%
Period from July 1, 2017 to December 31, 2018 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Secured net leverage ratio	475.00%
Period from January 1, 2019 and thereafter [Member] | Maximum [Member]
Debt Instrument [Line Items]
Secured net leverage ratio	400.00%

XML

Long-Term Debt (ABL Credit Facility Narrative) (Details) - USD ($)		6 Months Ended
	Apr. 29, 2016	Jun. 30, 2017
UBS Agreement [Member]
Debt Instrument [Line Items]
Amended agreement date		Apr. 11, 2017
ABL Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 125,000,000	$ 75,000,000
Line of credit, outstanding balance		50,000,000
Line of Credit Facility, Maturity Date	Apr. 29, 2021
Covenant Trigger Event, minimum required excess availability amount		$ 12,500,000
Covenant Trigger Event, minimum required excess availability as percentage of aggregate commitments		10.00%
Minimum Consolidated Fixed Charge Ratio required to be maintained if covenant trigger event occurs		110.00%
Cash Dominion Trigger Event, minimum required excess availability as percentage of aggregate commitments		12.50%
Cash Dominion Trigger Event, minimum required excess availability amount		$ 15,000,000
ABL Credit Facility, maturing 2021 [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Derivative, Floor Interest Rate	0.00%
ABL Credit Facility, maturing 2021 [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.75%
ABL Credit Facility, maturing 2021 [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.25%
ABL Credit Facility, maturing 2021 [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.75%
ABL Credit Facility, maturing 2021 [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.25%

XML

Long-Term Debt (Senior Notes Narrative) (Details) - USD ($)			6 Months Ended
	May 17, 2017	Apr. 22, 2016	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount			$ 24,536,000	$ 24,536,000
Senior Notes, maturing 2023 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 400,000,000
Debt Instrument, Interest Rate, Stated Percentage		11.625%
Debt Instrument, Unamortized Discount		$ 6,900,000
Debt instrument issue discount percentage		1.734%
Debt Instrument, Maturity Date		Apr. 15, 2023
Debt Instrument, Payment Terms			Payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016.
Debt Instrument, Frequency of Periodic Payment			semi-annually
Debt Instrument, Date of First Required Payment		Oct. 15, 2016
Debt Instrument, Interest Rate, Effective Percentage			12.48%
Debt Instrument, Redemption Price Percentage		100.00%
Senior Notes, maturing 2023 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Redemption Price Percentage		35.00%
Senior Notes, maturing 2023 [Member] | Initial Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 400,000,000
Debt Instrument, Interest Rate, Stated Percentage	11.625%
Debt instrument due date	2023
Senior Notes, maturing 2023 [Member] | Exchange Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	11.625%
Debt instrument due date	2023

XML

Long-Term Debt (Summary of Redemption Dates and Prices of Senior Notes) (Details) - Senior Notes, maturing 2023 [Member]		6 Months Ended
	Apr. 22, 2016	Jun. 30, 2017
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Price Percentage	100.00%
Period from April 15, 2019 to April 14, 2020 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Price Percentage		108.719%
Period from April 15, 2020 to April 14, 2021 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Price Percentage		105.813%
Period from April 15, 2021 to April 14, 2022 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Price Percentage		102.906%
Period from April 15, 2022 to April 14, 2023 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Price Percentage		100.00%

XML

Long-Term Debt (Summary of Redemption Dates and Prices of Senior Notes) (Parenthetical) (Details) - Senior Notes, maturing 2023 [Member]	6 Months Ended
	Jun. 30, 2017
Period from April 15, 2019 to April 14, 2020 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Period, Start Date	Apr. 15, 2019
Debt Instrument, Redemption Period, End Date	Apr. 14, 2020
Period from April 15, 2020 to April 14, 2021 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Period, Start Date	Apr. 15, 2020
Debt Instrument, Redemption Period, End Date	Apr. 14, 2021
Period from April 15, 2021 to April 14, 2022 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Period, Start Date	Apr. 15, 2021
Debt Instrument, Redemption Period, End Date	Apr. 14, 2022
Period from April 15, 2022 to April 14, 2023 [Member]
Debt Instrument Redemption [Line Items]
Debt Instrument, Redemption Period, Start Date	Apr. 15, 2022
Debt Instrument, Redemption Period, End Date	Apr. 14, 2023

XML

Long-Term Debt (Summary of Unamortized Debt Issuance Costs and Discounts) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Debt issuance costs	$ 32,084	$ 29,146
Debt discounts	24,536	24,536
Total debt issuance costs and discounts	56,620	53,682
Less: Amortization of debt issuance costs and discounts	(9,122)	(4,918)
Total unamortized debt issuance costs and discounts	$ 47,498	$ 48,764

XML

Long-Term Debt (Capital Lease Obligations and Other Debt Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Capital lease obligations	$ 25,000	$ 25,588
New Corporate Office [Member] | Brentwood, Tennessee [Member]
Debt Instrument [Line Items]
Capital lease obligations	$ 18,300

XML

Long-Term Debt (Summary of Debt Maturities for Next Five Years and Thereafter) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Remainder of 2017	$ 919
2018	7,820
2019	10,168
2020	10,251
2021	10,356
Thereafter	1,294,354
Total debt, excluding unamortized debt issuance costs and discounts	$ 1,333,868	$ 1,295,589

XML

Long-Term Debt (Summary of Components of Interest Expense, Net) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Debt Instrument [Line Items]
Amortization of debt issuance costs and discounts	$ 2,224	$ 1,191	$ 4,204	$ 1,191
All other interest expense (income), net	(842)	(359)	(1,954)	210
Total interest expense, net	30,458	29,276	57,988	56,728
Due to Parent, net	0	8,931	0	35,814
Senior Notes, maturing 2023 [Member]
Debt Instrument [Line Items]
Interest expense	11,629	8,914	23,255	8,914
ABL Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Interest expense	613	82	869	82
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member]
Debt Instrument [Line Items]
Interest expense	192	85	331	85
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member]
Debt Instrument [Line Items]
Interest expense	16,642	10,432	31,283	10,432
Interest Expense Portion From Long Term Debt [Member]
Debt Instrument [Line Items]
Total interest expense, net	$ 30,458	$ 20,345	$ 57,988	$ 20,914

XML

Other Long-Term Liabilities (Summary of Components of Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Other Liabilities Noncurrent [Line Items]
Insurance reserves for professional and general liability, long-term liability	$ 80,005	$ 74,194
Insurance reserve for workers' compensation liability, long-term liability	20,164	17,416
Benefit plan liabilities	36,028	10,722
Deferred rent	3,492	4,001
Other miscellaneous long-term liabilities	2,067	2,663
Total other long-term liabilities	141,756	108,996
Professional and General Liability Insurance [Member]
Other Liabilities Noncurrent [Line Items]
Insurance reserves for professional and general liability, long-term liability	$ 80,005	$ 74,194

XML

Fair Value of Financial Instruments (Summary of Carrying Amounts and Estimated Fair Values of Long-Term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	$ 1,333,868	$ 1,295,589
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	1,293,064	1,211,317
ABL Credit Facility, maturing 2021 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	50,000	0
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	50,000	0
Senior Notes, maturing 2023 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	400,000	400,000
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	355,980	334,720
Other debt [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	26,281	27,170
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	26,281	27,170
Senior Credit Facility [Member] | Revolving Credit Facility, maturing 2021 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	0	0
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	0	0
Senior Credit Facility [Member] | Term Loan Facility, maturing 2022 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total debt, excluding unamortized debt issuance costs and discounts, Carrying Amount	857,587	868,419
Total debt, excluding unamortized debt issuance costs and discounts, Estimated Fair Value	$ 860,803	$ 849,427

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Equity (Narrative) (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares	Apr. 29, 2016 USD ($) vote / shares $ / shares shares
Class Of Stock [Line Items]
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, par value | $ / shares	$ 0.0001	$ 0.0001
Preferred stock, shares issued	0	0
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	30,297,524	29,482,050
Common stock, shares outstanding	30,297,524	29,482,050	28,412,054
Common stock, par value | $ / shares	$ 0.0001	$ 0.0001
Contributed capital, in excess of par value of common stock | $	$ 541,774	$ 537,911
Spin-off from CHS [Member]
Class Of Stock [Line Items]
Preferred stock, shares authorized			100,000,000
Preferred stock, par value | $ / shares			$ 0.0001
Common stock, shares authorized			300,000,000
Common stock, shares issued			28,412,054
Common stock, par value | $ / shares			$ 0.0001
Common stock voting description	Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters for which stockholders may vote. Holders of the Company’s common stock will not have cumulative voting rights in the election of directors.
Number of vote | vote / shares			1
Contributed capital, in excess of par value of common stock | $			$ 530,600

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Income Taxes (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Effective income tax rate, continuing operations	0.80%	15.40%	(0.80%)	15.70%
Deferred income tax liabilities, net	$ 31,729,000		$ 31,729,000		$ 31,474,000
Increase (decrease) in deferred income taxes			200,000
Unrecognized tax benefit	$ 0	$ 0	$ 0	$ 0

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Earnings Per Share (Summary of Computation of Basic and Diluted Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net income (loss)	$ (30,575)	$ (243,966)	$ (57,780)	$ (248,653)
Less: Net income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Net income (loss) attributable to Quorum Health Corporation	$ (30,630)	$ (245,061)	$ (58,191)	$ (250,063)
Denominator:
Weighted-average shares outstanding - basic and diluted	28,145,215	28,412,720	27,977,738	28,412,389
Basic and diluted earnings (loss) per share attributable to Quorum Health Corporation stockholders	$ (1.09)	$ (8.63)	$ (2.08)	$ (8.80)

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Earnings Per Share (Narrative) (Details) - shares		3 Months Ended		6 Months Ended
	Apr. 27, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Apr. 29, 2016
Earnings Per Share [Abstract]
Common stock, shares outstanding		30,297,524		30,297,524		29,482,050	28,412,054
Dilutive Shares	0	0	0	0	0

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Segments (Narrative) (Details)	6 Months Ended
	Jun. 30, 2017 segment
Segment Reporting [Abstract]
Number of operating segments	2

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Segments (Summary of Financial Information Related to the Company`s Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Total net operating revenues	$ 530,146	$ 529,737	$ 1,057,786	$ 1,079,288
Total adjusted EBITDA	34,430	29,232	60,572	85,456
Total assets	1,987,501		1,987,501		$ 1,994,370
Hospital Operations Reporting Unit [Member]
Segment Reporting Information [Line Items]
Total net operating revenues	509,118	508,906	1,015,536	1,036,317
Total adjusted EBITDA	41,536	26,457	79,002	75,396
Total assets	1,759,694		1,759,694		1,802,121
All Other Operations [Member]
Segment Reporting Information [Line Items]
Total net operating revenues	21,028	20,831	42,250	42,971
Total adjusted EBITDA	(7,106)	$ 2,775	(18,430)	$ 10,060
Total assets	$ 227,807		$ 227,807		$ 192,249

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Segments (Summary of Reconciliation of Adjusted EBITDA to Net Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting [Abstract]
Total adjusted EBITDA	$ 34,430	$ 29,232	$ 60,572	$ 85,456
Interest expense, net	(30,458)	(29,276)	(57,988)	(56,728)
(Provision for) benefit from income taxes	245	44,565	(456)	46,239
Depreciation and amortization	(20,586)	(31,463)	(42,706)	(62,620)
Legal, professional and settlement costs	(3,934)	(5,447)	(4,469)	(5,688)
Impairment of long-lived assets and goodwill	(12,900)	(250,400)	(16,200)	(250,400)
Gain (loss) on sale of hospitals, net	4,321	0	5,191	0
Transaction costs related to the Spin-off	0	(1,177)	(31)	(4,912)
Post-spin headcount reductions	(1,693)	0	(1,693)	0
Net income (loss)	$ (30,575)	$ (243,966)	$ (57,780)	$ (248,653)

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Stock-Based Compensation (Narrative) (Details) $ in Thousands					3 Months Ended	6 Months Ended
	Apr. 28, 2017 shares	Feb. 22, 2017 shares	May 03, 2016 Director shares	Apr. 29, 2016 shares	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) shares	Jun. 30, 2016 USD ($)
Community Health Systems, Inc [Member] | Corporate Allocations [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense included in corporate management fee | $					$ 18,757		$ 81,059
Community Health Systems, Inc [Member] | Corporate Allocations [Member] | Share-based Compensation Expense Included in Corporate Management Fee [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense included in corporate management fee | $					$ 600		$ 2,300
Spin-off from CHS [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of cancelled shares in connection with the Spin-off				66.67%
QHC and CHS Restricted Stock Awards Held By QHC Employees as of Spin-off Date [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense | $						$ 1,200
QHC Restricted Stock Awards Granted Following Spin-off [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted						1,093,618
Unrecognized stock-based compensation expense | $						$ 13,300
2016 Stock Award Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock that may be issued under stock award plan				4,700,000
2016 Stock Award Plan [Member] | Restricted Stock [Member] | Performance-Based Vesting [Member] | Executive Officers [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted		230,000	460,000
Share-based compensation, vesting period		3 years	3 years
2016 Stock Award Plan [Member] | Restricted Stock [Member] | Time-Based Vesting [Member] | Executive Officers [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted		230,000
Share-based compensation, vesting period		3 years
2016 Stock Award Plan [Member] | Restricted Stock [Member] | Time-Based Vesting [Member] | Non-Employee Director, Individual [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted	168,618		10,000
Restrictions lapsing date on time-vested restricted stock awards	Feb. 22, 2018
Share-based compensation, vesting description						The restrictions on the time-vested restricted stock awards will lapse on the first anniversary of the grant date.
Number of directors | Director			7
2016 Stock Award Plan [Member] | Restricted Stock [Member] | Time-Based Vesting [Member] | Certain Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted		420,000	551,005
Share-based compensation, vesting period		3 years	3 years
2016 Stock Award Plan [Member] | Restricted Stock, Recoupment Awards [Member] | Time-Based Vesting [Member] | Certain Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, shares granted			106,005
Share-based compensation, vesting description						Restrictions on the recoupment awards lapse in equal installments on the second and third anniversaries of the grant date.

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Stock-Based Compensation (Summary of Activity Related to Unvested Restricted Stock Awards) (Details)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
QHC Awards Distributed in Spin-off [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awards at beginning of period, Shares	673,987
Vested, Shares	(236,295)
Forfeited, Shares	(152,973)
Unvested restricted stock awards at end of period, Shares	284,719
QHC Awards Distributed in Spin-off [Member] | QHC Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awards at beginning of period, Shares	52,462
Vested, Shares	(34,009)
Forfeited, Shares	(14,129)
Unvested restricted stock awards at end of period, Shares	4,324
QHC Awards Distributed in Spin-off [Member] | CHS Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awards at beginning of period, Shares	621,525
Vested, Shares	(202,286)
Forfeited, Shares	(138,844)
Unvested restricted stock awards at end of period, Shares	280,395
QHC Restricted Stock Awards Granted Following Spin-off [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awards at beginning of period, Shares	1,081,005
Granted, Shares	1,093,618
Vested, Shares	(282,582)
Forfeited, Shares	(125,069)
Unvested restricted stock awards at end of period, Shares	1,766,972
Unvested restricted stock awards at beginning of period, Weighted Average Grant Date Fair Value | $ / shares	$ 12.77
Granted, Weighted Average Grant Date Fair Value | $ / shares	7.64
Vested, Weighted Average Grant Date Fair Value | $ / shares	12.77
Forfeited, Weighted Average Grant Date Fair Value | $ / shares	12.43
Unvested restricted stock awards at end of period, Weighted Average Grant Date Fair Value | $ / shares	$ 9.62

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Stock-Based Compensation (Summary of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,531	$ 1,897	$ 5,328	$ 1,897
Resulting from Spin-off [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	448	809	1,364	809
Related to Grants Following Spin-off [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,083	$ 1,088	$ 3,964	$ 1,088

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Employee Benefit Plans (Narrative) (Details)				1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 16, 2016 Installment shares	Aug. 18, 2016	Apr. 02, 2016 USD ($)	Jan. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Hospital	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, total expense					$ 4,000,000	$ 3,700,000	$ 6,900,000	$ 7,000,000
Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan net periodic benefit cost					100,000	$ 100,000	$ 200,000	$ 100,000
Number of Hospitals | Hospital							1
Accrued benefit liability					1,100,000		$ 1,100,000		$ 1,100,000
Original SERP Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, assets transferred			$ 0
Amended and Restated SERP Plan [Member] | Salaries and Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan net periodic benefit cost					500,000		1,000,000
Maximum [Member] | Director's Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of annual installments | Installment	15
Common stock shares available for issue | shares	150,000
Other long-term liabilities [Member] | Original SERP Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability			$ 6,000,000
Other long-term liabilities [Member] | Amended and Restated SERP Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability					8,000,000		8,000,000		7,100,000
Accrued Salaries and Benefits [Member] | Amended and Restated SERP Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Current portion of benefit liability					2,300,000		2,300,000		$ 2,300,000
CHS Unfunded Deferred Compensation Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, assets transferred				$ 22,900,000
Defined benefit plan, liabilities transferred				$ 23,900,000
QHCCS, LLC Nonqualified Deferred Compensation Plan [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of incentive compensation participants are permitted to defer		100.00%
QHCCS, LLC Nonqualified Deferred Compensation Plan [Member] | Other long-term liabilities [Member]
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability					24,500,000		24,500,000
QHCCS, LLC Nonqualified Deferred Compensation Plan [Member] | Other long-term Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Long-term portion of benefit Asset					$ 23,400,000		$ 23,400,000

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Related Party Transactions (Summary of Allocated Costs from Parent) (Details) - Community Health Systems, Inc [Member] - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Management Fees From Parent [Member]
Related Party Transaction [Line Items]
Related party operating costs and expenses	$ 2,966	$ 11,792
Corporate Allocations [Member]
Related Party Transaction [Line Items]
Related party operating costs and expenses	18,757	81,059
Corporate Allocations [Member] | Insurance Costs [Member]
Related Party Transaction [Line Items]
Related party operating costs and expenses	10,486	44,246
Corporate Allocations [Member] | Management Fees From Parent [Member]
Related Party Transaction [Line Items]
Related party operating costs and expenses	2,966	11,792
Corporate Allocations [Member] | All Other Allocated Costs [Member]
Related Party Transaction [Line Items]
Related party operating costs and expenses	$ 5,305	$ 25,021

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Related Party Transactions (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Related Party Transaction [Line Items]
Interest Expense, Related Party	$ 0	$ 8,931	$ 0	$ 35,814
Community Health Systems, Inc [Member]
Related Party Transaction [Line Items]
Interest Expense, Related Party		8,900		35,800
Community Health Systems, Inc [Member] | Transition Services Agreements
Related Party Transaction [Line Items]
Terms of transitional service agreements			5 years
Community Health Systems, Inc [Member] | Transition Services Agreements and Allocation from Parent Prior to Spin-Off [Member]
Related Party Transaction [Line Items]
Total expenses incurred and allocation from parent	$ 16,000	$ 17,800	$ 32,300	$ 34,100
Community Health Systems, Inc [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Related party transaction, rate			4.00%
Community Health Systems, Inc [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Related party transaction, rate			7.00%

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Commitments and Contingencies (Narrative) (Details) - USD ($)			3 Months Ended		6 Months Ended
	Aug. 04, 2017	Dec. 23, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Other Commitments [Line Items]
Property and equipment, at cost			$ 1,436,407,000		$ 1,436,407,000		$ 1,519,975,000
McKenzie – Willamette Medical Center Project [Member] | Asset Under Construction [Member] | Construction and Capital Commitments [Member]
Other Commitments [Line Items]
Construction costs incurred during the period			12,800,000	$ 10,300,000	24,500,000	$ 17,200,000
Property and equipment, at cost			73,400,000		73,400,000
Increased in estimated costs due to expansion of project, including emergency room and operating rooms			105,000,000		$ 105,000,000
Expected project to be completed period					late 2018
Physician Recruiting Commitments, Income Guarantee [Member]
Other Commitments [Line Items]
Maximum potential amount of future payments in excess of liabilities recorded			1,500,000		$ 1,500,000
Guarantee period					1 year
Commitment periods over which physician agrees to practice in designated community					3 years
Liabilities related to income guarantee agreements			1,100,000		$ 1,100,000		$ 1,600,000
Professional and General Liability Insurance [Member]
Other Commitments [Line Items]
Self-insured retention level			5,000,000		5,000,000
Worker's Compensation Liability [Member]
Other Commitments [Line Items]
Self-insured retention level			500,000		500,000
Quorum Health Resources [Member] | Professional and General Liability Insurance [Member]
Other Commitments [Line Items]
Self-insured retention level			$ 6,000,000		6,000,000
Quorum Health Resources [Member] | United Tort Claimants and Douthitt-Dugger, et al. [Member]
Other Commitments [Line Items]
Plaintiffs' claims liability not covered by insurance					$ 5,100,000
Percentage of fault of company for plaintiffs' injuries		16.50%
Lawsuit filing date					June 11, 2010
Trial of the claims					On June 19, 2017, a one-day bankruptcy court bench trial was held on an issue related to the enforceability of the prior settlement agreement, and no decision has been received to date. In addition, the final phase of the trial in federal bankruptcy court, to determine plaintiffs’ damages and QHR offsets, was tried July 24 through August 7, 2017, and no decision has been received to date. The United Tort Claimants (“UTC”) have made new and yet unproven allegations during trial that they contend warrant additional liability for QHR. QHR believes that the UTC’s contentions are without merit and are vigorously defending against them. The New Mexico state court has set March 8, 2018 as the trial date for plaintiffs’ claims against QHR. QHR’s insurer, Lexington Insurance Company, is providing a defense in these cases, subject to a reservation of rights. Lexington has sued QHR in Williamson County, Tennessee seeking a declaration that plaintiffs’ claims and the cost of defending QHR are not covered by Lexington. (Lexington Insurance Company v. Quorum Health Resources, LLC, et al. (Williamson County, Tennessee Chancery Court)). No trial date has been set for Lexington’s claim against QHR to nullify insurance coverage, which QHR is also vigorously defending. The Company has sought partial summary judgment on Lexington's claim for reimbursement of defense costs incurred in the UTC actions, and no decision has been received.
Subsequent Event [Member] | Arbitration with Community Health Systems, Inc. [Member]
Other Commitments [Line Items]
Payment related to transaction service agreements sought	$ 5,600,000

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Commitments and Contingencies - (Summary of Insurance Reserves Related to Professional and General Liability Claims and Workers Compensation Claims) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Insurance reserves for professional and general liability, current receivable	$ 22,984	$ 17,580
Insurance reserve for workers' compensation liability, current receivable	3,498	4,863
Total self-insurance reserves, current receivable	26,482	22,443
Insurance reserves for professional and general liability, long-term receivable	55,743	59,652
Insurance reserve for workers' compensation liability, long-term receivable	16,808	15,958
Total self-insurance reserves, long-term receivable	72,551	75,610
Insurance reserves for professional and general liability, current liability	24,401	17,810
Insurance reserve for workers' compensation liability, current liability	5,233	6,599
Total self-insurance reserves, current liability	29,634	24,409
Insurance reserves for professional and general liability, long-term liability	80,005	74,194
Insurance reserve for workers' compensation liability, long-term liability	20,164	17,416
Total self-insurance reserves, long-term liability	100,169	91,610
Insurance Reserves Indemnified By CHS, Inc. [Member]
Loss Contingencies [Line Items]
Insurance reserves for professional and general liability, current receivable	22,984	17,580
Insurance reserve for workers' compensation liability, current receivable	3,498	4,863
Insurance reserves for professional and general liability, long-term receivable	55,743	59,652
Insurance reserve for workers' compensation liability, long-term receivable	16,808	15,958
Insurance reserves for professional and general liability, current liability	22,984	17,580
Insurance reserve for workers' compensation liability, current liability	3,498	4,863
Insurance reserves for professional and general liability, long-term liability	55,743	59,652
Insurance reserve for workers' compensation liability, long-term liability	16,808	15,958
All Other Self-insurance Reserves [Member]
Loss Contingencies [Line Items]
Insurance reserves for professional and general liability, current receivable	0	0
Insurance reserve for workers' compensation liability, current receivable	0	0
Insurance reserves for professional and general liability, long-term receivable	0	0
Insurance reserve for workers' compensation liability, long-term receivable	0	0
Insurance reserves for professional and general liability, current liability	1,417	230
Insurance reserve for workers' compensation liability, current liability	1,735	1,736
Insurance reserves for professional and general liability, long-term liability	24,262	14,542
Insurance reserve for workers' compensation liability, long-term liability	$ 3,356	$ 1,458

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Subsequent Events (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Subsequent Event [Line Items]
Pay down of term loan		$ 4,738	$ 3,188	$ 11,847	$ 4,277
Trinity Hospital of Augusta [Member] | Subsequent Event [Member] | Term Loan Facility [Member]
Subsequent Event [Line Items]
Pay down of term loan	$ 4,200
Trinity Hospital of Augusta [Member] | Subsequent Event [Member] | ABL Credit Facility [Member]
Subsequent Event [Line Items]
Pay down of term loan	$ 10,400

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Guarantor and Non-Guarantor Supplemental Information (Narrative) (Details)	6 Months Ended
	Jun. 30, 2017
Condensed Financial Information Of Parent Company Only Disclosure [Abstract]
Percentage of owned domestic subsidiaries which guaranteed senior notes	100.00%

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Guarantor and Non-Guarantor Supplemental Information (Schedule of Condensed Consolidating and Combining Statement of Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Income Statements Captions [Line Items]
Operating revenues, net of contractual allowances and discounts	$ 585,215	$ 598,163	$ 1,173,160	$ 1,212,647
Provision for bad debts	55,069	68,426	115,374	133,359
Net operating revenues	530,146	529,737	1,057,786	1,079,288
Operating costs and expenses:
Salaries and benefits	265,309	264,886	529,911	521,748
Supplies	64,112	64,136	127,934	127,797
Other operating expenses	157,613	163,185	321,037	327,648
Depreciation and amortization	20,586	31,463	42,706	62,620
Rent	12,152	12,545	24,254	25,094
Electronic health records incentives earned	(1,777)	(4,247)	(4,229)	(8,455)
Legal, professional and settlement costs	3,934	5,447	4,469	5,688
Impairment of long-lived assets and goodwill	12,900	250,400	16,200	250,400
Loss (gain) on sale of hospitals, net	(4,321)	0	(5,191)	0
Transaction costs related to the Spin-off	0	1,177	31	4,912
Total operating costs and expenses	530,508	788,992	1,057,122	1,317,452
Income (loss) from operations	(362)	(259,255)	664	(238,164)
Interest expense, net	30,458	29,276	57,988	56,728
Equity in earnings of affiliates	0	0	0	0
Income (loss) before income taxes	(30,820)	(288,531)	(57,324)	(294,892)
Provision for (benefit from) income taxes	(245)	(44,565)	456	(46,239)
Net income (loss)	(30,575)	(243,966)	(57,780)	(248,653)
Less: Net income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Net income (loss) attributable to Quorum Health Corporation	(30,630)	(245,061)	(58,191)	(250,063)
Reportable Legal Entities [Member] | Parent Issuer [Member]
Condensed Income Statements Captions [Line Items]
Operating revenues, net of contractual allowances and discounts	0	0	0	0
Provision for bad debts	0	0	0	0
Net operating revenues	0	0	0	0
Operating costs and expenses:
Salaries and benefits	0	0	0	0
Supplies	0	0	0	0
Other operating expenses	2,892	0	2,892	0
Depreciation and amortization	0	0	0	0
Rent	0	0	0	0
Electronic health records incentives earned	0	0	0	0
Legal, professional and settlement costs	0	0	0	0
Impairment of long-lived assets and goodwill	0	0	0	0
Loss (gain) on sale of hospitals, net	0	0	0
Transaction costs related to the Spin-off	0	0	0	0
Total operating costs and expenses	2,892	0	2,892	0
Income (loss) from operations	(2,892)	0	(2,892)	0
Interest expense, net	31,349	20,641	59,933	20,641
Equity in earnings of affiliates	(3,344)	217,051	(5,091)	217,051
Income (loss) before income taxes	(30,897)	(237,692)	(57,734)	(237,692)
Provision for (benefit from) income taxes	(267)	(2,740)	457	(2,740)
Net income (loss)	(30,630)	(234,952)	(58,191)	(234,952)
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Net income (loss) attributable to Quorum Health Corporation	(30,630)	(234,952)	(58,191)	(234,952)
Reportable Legal Entities [Member] | Other Guarantors [Member]
Condensed Income Statements Captions [Line Items]
Operating revenues, net of contractual allowances and discounts	455,874	446,968	904,874	906,715
Provision for bad debts	48,050	51,551	97,609	99,906
Net operating revenues	407,824	395,417	807,265	806,809
Operating costs and expenses:
Salaries and benefits	182,437	178,375	363,459	350,577
Supplies	45,403	44,788	91,276	89,569
Other operating expenses	124,634	126,539	253,944	257,998
Depreciation and amortization	17,591	25,774	36,119	51,264
Rent	7,064	6,870	14,162	13,891
Electronic health records incentives earned	(1,981)	(3,995)	(3,438)	(7,994)
Legal, professional and settlement costs	3,934	5,447	4,469	5,688
Impairment of long-lived assets and goodwill	12,900	213,600	16,200	213,600
Loss (gain) on sale of hospitals, net	0	0	0
Transaction costs related to the Spin-off	0	857	23	3,655
Total operating costs and expenses	391,982	598,255	776,214	978,248
Income (loss) from operations	15,842	(202,838)	31,051	(171,439)
Interest expense, net	(970)	7,960	(2,026)	33,500
Equity in earnings of affiliates	2,554	1,760	5,132	1,760
Income (loss) before income taxes	14,258	(212,558)	27,945	(206,699)
Provision for (benefit from) income taxes	(140)	(33,952)	222	(32,410)
Net income (loss)	14,398	(178,606)	27,723	(174,289)
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Net income (loss) attributable to Quorum Health Corporation	14,398	(178,606)	27,723	(174,289)
Reportable Legal Entities [Member] | Non-Guarantors [Member]
Condensed Income Statements Captions [Line Items]
Operating revenues, net of contractual allowances and discounts	129,341	151,195	268,286	305,932
Provision for bad debts	7,019	16,875	17,765	33,453
Net operating revenues	122,322	134,320	250,521	272,479
Operating costs and expenses:
Salaries and benefits	82,872	86,511	166,452	171,171
Supplies	18,709	19,348	36,658	38,228
Other operating expenses	30,087	36,646	64,201	69,650
Depreciation and amortization	2,995	5,689	6,587	11,356
Rent	5,088	5,675	10,092	11,203
Electronic health records incentives earned	204	(252)	(791)	(461)
Legal, professional and settlement costs	0	0	0	0
Impairment of long-lived assets and goodwill	0	36,800	0	36,800
Loss (gain) on sale of hospitals, net	(4,321)	0	(5,191)
Transaction costs related to the Spin-off	0	320	8	1,257
Total operating costs and expenses	135,634	190,737	278,016	339,204
Income (loss) from operations	(13,312)	(56,417)	(27,495)	(66,725)
Interest expense, net	79	675	81	2,587
Equity in earnings of affiliates	0	0	0	0
Income (loss) before income taxes	(13,391)	(57,092)	(27,576)	(69,312)
Provision for (benefit from) income taxes	162	(7,873)	(223)	(11,089)
Net income (loss)	(13,553)	(49,219)	(27,353)	(58,223)
Less: Net income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Net income (loss) attributable to Quorum Health Corporation	(13,608)	(50,314)	(27,764)	(59,633)
Eliminations [Member]
Condensed Income Statements Captions [Line Items]
Operating revenues, net of contractual allowances and discounts	0	0	0	0
Provision for bad debts	0	0	0	0
Net operating revenues	0	0	0	0
Operating costs and expenses:
Salaries and benefits	0	0	0	0
Supplies	0	0	0	0
Other operating expenses	0	0	0	0
Depreciation and amortization	0	0	0	0
Rent	0	0	0	0
Electronic health records incentives earned	0	0	0	0
Legal, professional and settlement costs	0	0	0	0
Impairment of long-lived assets and goodwill	0	0	0	0
Loss (gain) on sale of hospitals, net	0	0	0
Transaction costs related to the Spin-off	0	0	0	0
Total operating costs and expenses	0	0	0	0
Income (loss) from operations	0	0	0	0
Interest expense, net	0	0	0	0
Equity in earnings of affiliates	790	(218,811)	(41)	(218,811)
Income (loss) before income taxes	(790)	218,811	41	218,811
Provision for (benefit from) income taxes	0	0	0	0
Net income (loss)	(790)	218,811	41	218,811
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Net income (loss) attributable to Quorum Health Corporation	$ (790)	$ 218,811	$ 41	$ 218,811

XML

Guarantor and Non-Guarantor Supplemental Information (Schedule of Condensed Consolidating and Combining Statement of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Statement Of Income Captions [Line Items]
Net income (loss)	$ (30,575)	$ (243,966)	$ (57,780)	$ (248,653)
Amortization and recognition of unrecognized pension cost components, net of income taxes	120	(3,810)	242	(3,810)
Comprehensive income (loss)	(30,455)	(247,776)	(57,538)	(252,463)
Less: Comprehensive income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	(30,510)	(248,871)	(57,949)	(253,873)
Reportable Legal Entities [Member] | Parent Issuer [Member]
Condensed Statement Of Income Captions [Line Items]
Net income (loss)	(30,630)	(234,952)	(58,191)	(234,952)
Amortization and recognition of unrecognized pension cost components, net of income taxes	120	(3,810)	242	(3,810)
Comprehensive income (loss)	(30,510)	(238,762)	(57,949)	(238,762)
Less: Comprehensive income (loss) attributable to noncontrolling interests	0	0	0	0
Comprehensive income (loss) attributable to Quorum Health Corporation	(30,510)	(238,762)	(57,949)	(238,762)
Reportable Legal Entities [Member] | Other Guarantors [Member]
Condensed Statement Of Income Captions [Line Items]
Net income (loss)	14,398	(178,606)	27,723	(174,289)
Amortization and recognition of unrecognized pension cost components, net of income taxes	120	(3,810)	242	(3,810)
Comprehensive income (loss)	14,518	(182,416)	27,965	(178,099)
Less: Comprehensive income (loss) attributable to noncontrolling interests	0	0	0	0
Comprehensive income (loss) attributable to Quorum Health Corporation	14,518	(182,416)	27,965	(178,099)
Reportable Legal Entities [Member] | Non-Guarantors [Member]
Condensed Statement Of Income Captions [Line Items]
Net income (loss)	(13,553)	(49,219)	(27,353)	(58,223)
Amortization and recognition of unrecognized pension cost components, net of income taxes	0	0	0	0
Comprehensive income (loss)	(13,553)	(49,219)	(27,353)	(58,223)
Less: Comprehensive income (loss) attributable to noncontrolling interests	55	1,095	411	1,410
Comprehensive income (loss) attributable to Quorum Health Corporation	(13,608)	(50,314)	(27,764)	(59,633)
Eliminations [Member]
Condensed Statement Of Income Captions [Line Items]
Net income (loss)	(790)	218,811	41	218,811
Amortization and recognition of unrecognized pension cost components, net of income taxes	(120)	3,810	(242)	3,810
Comprehensive income (loss)	(910)	222,621	(201)	222,621
Less: Comprehensive income (loss) attributable to noncontrolling interests	0	0	0	0
Comprehensive income (loss) attributable to Quorum Health Corporation	$ (910)	$ 222,621	$ (201)	$ 222,621

XML

Guarantor and Non-Guarantor Supplemental Information (Schedule of Condensed Consolidating and Combining Balance Sheet) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Apr. 29, 2016	Apr. 27, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 22,405	$ 89,542	$ 25,455	$ 55,145			$ 996	$ 1,106
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	409,217		380,685
Inventories	54,269		58,124
Prepaid expenses	27,641		23,028
Due from third-party payors	97,172		116,235
Current assets of hospitals held for sale	5,813		1,502
Other current assets	48,329		57,942
Total current assets	664,846		662,971
Intercompany receivable	0		0
Property and equipment, net	711,478		733,900
Goodwill	409,781		416,833
Intangible assets, net	77,694		84,982
Long-term assets of hospitals held for sale	14,381		6,851
Other long-term assets	109,321		88,833
Net investment in subsidiaries	0		0
Total assets	1,987,501		1,994,370
Current liabilities:
Current maturities of long-term debt	1,649		5,683
Accounts payable	170,862		169,684
Accrued liabilities:
Accrued salaries and benefits	94,381		98,803
Accrued interest	10,142		19,915
Due to third-party payors	38,881		42,537
Current liabilities of hospitals held for sale	1,391		492
Other current liabilities	47,163		53,268
Total current liabilities	364,469		390,382
Long-term debt	1,284,721		1,241,142		$ 1,250,497	$ 24,179
Intercompany payable	0		0
Deferred income tax liabilities, net	31,729		31,474
Other long-term liabilities	141,756		108,996
Total liabilities	1,822,675		1,771,994
Redeemable noncontrolling interests	5,614		6,807	8,360				8,958
Quorum Health Corporation stockholders' equity:
Preferred stock	0		0
Common stock	3		3
Additional paid-in capital	541,774		537,911
Accumulated other comprehensive income (loss)	(2,518)		(2,760)
Accumulated deficit	(392,217)		(334,026)
Total Quorum Health Corporation stockholders' equity	147,042		201,128
Nonredeemable noncontrolling interests	12,170		14,441
Total equity	159,212		215,569	293,651				15,943
Total liabilities and equity	1,987,501		1,994,370
Reportable Legal Entities [Member] | Parent Issuer [Member]
Current assets:
Cash and cash equivalents	15,030		21,609	52,162				0
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	0		0
Inventories	0		0
Prepaid expenses	100		0
Due from third-party payors	0		0
Current assets of hospitals held for sale	0		0
Other current assets	0		0
Total current assets	15,130		21,609
Intercompany receivable	3		3
Property and equipment, net	0		0
Goodwill	0		0
Intangible assets, net	0		0
Long-term assets of hospitals held for sale	0		0
Other long-term assets	0		0
Net investment in subsidiaries	1,495,140		1,485,213
Total assets	1,510,273		1,506,825
Current liabilities:
Current maturities of long-term debt	0		3,819
Accounts payable	46		158
Accrued liabilities:
Accrued salaries and benefits	0		0
Accrued interest	10,142		19,915
Due to third-party payors	0		0
Current liabilities of hospitals held for sale	0		0
Other current liabilities	340		0
Total current liabilities	10,528		23,892
Long-term debt	1,260,089		1,215,836
Intercompany payable	60,885		34,495
Deferred income tax liabilities, net	31,729		31,474
Other long-term liabilities	0		0
Total liabilities	1,363,231		1,305,697
Redeemable noncontrolling interests	0		0
Quorum Health Corporation stockholders' equity:
Preferred stock	0		0
Common stock	3		3
Additional paid-in capital	541,774		537,911
Accumulated other comprehensive income (loss)	(2,518)		(2,760)
Accumulated deficit	(392,217)		(334,026)
Total Quorum Health Corporation stockholders' equity	147,042		201,128
Nonredeemable noncontrolling interests	0		0
Total equity	147,042		201,128
Total liabilities and equity	1,510,273		1,506,825
Reportable Legal Entities [Member] | Other Guarantors [Member]
Current assets:
Cash and cash equivalents	7,001		3,498	481				524
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	322,135		277,155
Inventories	44,616		46,318
Prepaid expenses	21,733		17,874
Due from third-party payors	92,387		109,793
Current assets of hospitals held for sale	5,813		1,502
Other current assets	33,562		41,673
Total current assets	527,247		497,813
Intercompany receivable	217,985		126,035
Property and equipment, net	584,791		624,457
Goodwill	244,192		252,433
Intangible assets, net	69,616		73,404
Long-term assets of hospitals held for sale	14,365		6,851
Other long-term assets	86,889		72,967
Net investment in subsidiaries	0		0
Total assets	1,745,085		1,653,960
Current liabilities:
Current maturities of long-term debt	1,395		1,560
Accounts payable	148,826		147,521
Accrued liabilities:
Accrued salaries and benefits	68,200		69,896
Accrued interest	0		0
Due to third-party payors	37,584		40,595
Current liabilities of hospitals held for sale	1,391		492
Other current liabilities	33,934		46,002
Total current liabilities	291,330		306,066
Long-term debt	24,301		24,899
Intercompany payable	172,970		86,084
Deferred income tax liabilities, net	0		0
Other long-term liabilities	175,295		144,950
Total liabilities	663,896		561,999
Redeemable noncontrolling interests	0		0
Quorum Health Corporation stockholders' equity:
Preferred stock	0		0
Common stock	0		0
Additional paid-in capital	1,290,232		1,333,347
Accumulated other comprehensive income (loss)	(2,518)		(2,760)
Accumulated deficit	(206,525)		(238,626)
Total Quorum Health Corporation stockholders' equity	1,081,189		1,091,961
Nonredeemable noncontrolling interests	0		0
Total equity	1,081,189		1,091,961
Total liabilities and equity	1,745,085		1,653,960
Reportable Legal Entities [Member] | Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	374		348	2,502				582
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	87,082		103,530
Inventories	9,653		11,806
Prepaid expenses	5,808		5,154
Due from third-party payors	4,785		6,442
Current assets of hospitals held for sale	0		0
Other current assets	14,767		16,269
Total current assets	122,469		143,549
Intercompany receivable	171,744		84,827
Property and equipment, net	126,687		109,443
Goodwill	165,589		164,400
Intangible assets, net	8,078		11,578
Long-term assets of hospitals held for sale	16		0
Other long-term assets	22,432		15,866
Net investment in subsidiaries	0		0
Total assets	617,015		529,663
Current liabilities:
Current maturities of long-term debt	254		304
Accounts payable	21,990		22,005
Accrued liabilities:
Accrued salaries and benefits	26,181		28,907
Accrued interest	0		0
Due to third-party payors	1,297		1,942
Current liabilities of hospitals held for sale	0		0
Other current liabilities	12,889		7,266
Total current liabilities	62,611		60,424
Long-term debt	331		407
Intercompany payable	155,877		90,286
Deferred income tax liabilities, net	0		0
Other long-term liabilities	30,198		22,651
Total liabilities	249,017		173,768
Redeemable noncontrolling interests	5,614		6,807
Quorum Health Corporation stockholders' equity:
Preferred stock	0		0
Common stock	0		0
Additional paid-in capital	460,414		412,705
Accumulated other comprehensive income (loss)	0		0
Accumulated deficit	(110,200)		(78,058)
Total Quorum Health Corporation stockholders' equity	350,214		334,647
Nonredeemable noncontrolling interests	12,170		14,441
Total equity	362,384		349,088
Total liabilities and equity	617,015		529,663
Eliminations [Member]
Current assets:
Cash and cash equivalents	0		0	$ 0				$ 0
Patient accounts receivable, net of allowance for doubtful accounts of $340,197 and $360,796 at June 30, 2017 and December 31, 2016, respectively	0		0
Inventories	0		0
Prepaid expenses	0		0
Due from third-party payors	0		0
Current assets of hospitals held for sale	0		0
Other current assets	0		0
Total current assets	0		0
Intercompany receivable	(389,732)		(210,865)
Property and equipment, net	0		0
Goodwill	0		0
Intangible assets, net	0		0
Long-term assets of hospitals held for sale	0		0
Other long-term assets	0		0
Net investment in subsidiaries	(1,495,140)		(1,485,213)
Total assets	(1,884,872)		(1,696,078)
Current liabilities:
Current maturities of long-term debt	0		0
Accounts payable	0		0
Accrued liabilities:
Accrued salaries and benefits	0		0
Accrued interest	0		0
Due to third-party payors	0		0
Current liabilities of hospitals held for sale	0		0
Other current liabilities	0		0
Total current liabilities	0		0
Long-term debt	0		0
Intercompany payable	(389,732)		(210,865)
Deferred income tax liabilities, net	0		0
Other long-term liabilities	(63,737)		(58,605)
Total liabilities	(453,469)		(269,470)
Redeemable noncontrolling interests	0		0
Quorum Health Corporation stockholders' equity:
Preferred stock	0		0
Common stock	0		0
Additional paid-in capital	(1,750,646)		(1,746,052)
Accumulated other comprehensive income (loss)	2,518		2,760
Accumulated deficit	316,725		316,684
Total Quorum Health Corporation stockholders' equity	(1,431,403)		(1,426,608)
Nonredeemable noncontrolling interests	0		0
Total equity	(1,431,403)		(1,426,608)
Total liabilities and equity	$ (1,884,872)		$ (1,696,078)

XML

Guarantor and Non-Guarantor Supplemental Information (Schedule of Condensed Consolidating and Combining Statement of Cash Flows (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 29, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Cash Flow Statements Captions [Line Items]
Net cash provided by (used in) operating activities		$ (27,481)	$ 36,796	$ (8,955)	$ 61,193
Cash flows from investing activities:
Capital expenditures for property and equipment		(15,925)	(20,367)	(39,142)	(33,207)
Capital expenditures for software		(1,663)	(1,278)	(3,169)	(3,804)
Acquisitions, net of cash acquired		(1,887)	0	(1,887)	0
Proceeds from the sale of hospitals		15,874	0	20,156	0
Other investing activities		0	492	0	1,402
Changes in intercompany balances with affiliates, net				0	0
Net cash provided by (used in) investing activities		(3,601)	(21,153)	(24,042)	(35,609)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net		(28,000)	0	50,000	0
Borrowings of long-term debt		72	1,255,500	72	1,255,520
Repayments of long-term debt		(4,738)	(3,188)	(11,847)	(4,277)
Increase (decrease) in Due to Parent, net		0	31,669	0	25,183
Payments of debt issuance costs	$ (29,146)	(2,891)	(28,003)	(2,938)	(28,003)
Cash paid to Parent related to the Spin-off		0	(1,217,336)	0	(1,217,336)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares		(461)	27	(1,489)	27
Cash distributions to noncontrolling investors		(37)	(163)	(3,851)	(2,647)
Purchases of shares from noncontrolling investors		0	0	0	(12)
Changes in intercompany balances with affiliates, net				0	0
Net cash provided by (used in) financing activities		(36,055)	38,506	29,947	28,455
Net change in cash and cash equivalents		(67,137)	54,149	(3,050)	54,039
Cash and cash equivalents at beginning of period		89,542	996	25,455	1,106
Cash and cash equivalents at end of period		22,405	55,145	22,405	55,145
Reportable Legal Entities [Member] | Parent Issuer [Member]
Condensed Cash Flow Statements Captions [Line Items]
Net cash provided by (used in) operating activities				(68,468)	(3,759)
Cash flows from investing activities:
Capital expenditures for property and equipment				0	0
Capital expenditures for software				0	0
Acquisitions, net of cash acquired				0
Proceeds from the sale of hospitals				0
Other investing activities					0
Changes in intercompany balances with affiliates, net				0	0
Net cash provided by (used in) investing activities				0	0
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net				50,000
Borrowings of long-term debt				0	1,255,464
Repayments of long-term debt				(10,832)	(2,200)
Increase (decrease) in Due to Parent, net					0
Payments of debt issuance costs				(2,938)	(28,003)
Cash paid to Parent related to the Spin-off					(1,217,336)
Cancellation of restricted stock awards for payroll tax withholdings on vested shares				0	0
Cash distributions to noncontrolling investors				0	0
Purchases of shares from noncontrolling investors					0
Changes in intercompany balances with affiliates, net				25,659	47,996
Net cash provided by (used in) financing activities				61,889	55,921
Net change in cash and cash equivalents				(6,579)	52,162
Cash and cash equivalents at beginning of period				21,609	0
Cash and cash equivalents at end of period		15,030	52,162	15,030	52,162
Reportable Legal Entities [Member] | Other Guarantors [Member]
Condensed Cash Flow Statements Captions [Line Items]
Net cash provided by (used in) operating activities				52,472	87,812
Cash flows from investing activities:
Capital expenditures for property and equipment				(13,390)	(29,216)
Capital expenditures for software				(2,670)	(2,426)
Acquisitions, net of cash acquired				(20)
Proceeds from the sale of hospitals				0
Other investing activities					2,509
Changes in intercompany balances with affiliates, net				(30,637)	(82,211)
Net cash provided by (used in) investing activities				(46,717)	(111,344)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net				0
Borrowings of long-term debt				72	56
Repayments of long-term debt				(835)	(1,777)
Increase (decrease) in Due to Parent, net					25,183
Payments of debt issuance costs				0	0
Cash paid to Parent related to the Spin-off					0
Cancellation of restricted stock awards for payroll tax withholdings on vested shares				(1,489)	27
Cash distributions to noncontrolling investors				0	0
Purchases of shares from noncontrolling investors					0
Changes in intercompany balances with affiliates, net				0	0
Net cash provided by (used in) financing activities				(2,252)	23,489
Net change in cash and cash equivalents				3,503	(43)
Cash and cash equivalents at beginning of period				3,498	524
Cash and cash equivalents at end of period		7,001	481	7,001	481
Reportable Legal Entities [Member] | Non-Guarantors [Member]
Condensed Cash Flow Statements Captions [Line Items]
Net cash provided by (used in) operating activities				7,041	(22,860)
Cash flows from investing activities:
Capital expenditures for property and equipment				(25,752)	(3,991)
Capital expenditures for software				(499)	(1,378)
Acquisitions, net of cash acquired				(1,867)
Proceeds from the sale of hospitals				20,156
Other investing activities					(1,107)
Changes in intercompany balances with affiliates, net				0	0
Net cash provided by (used in) investing activities				(7,962)	(6,476)
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net				0
Borrowings of long-term debt				0	0
Repayments of long-term debt				(180)	(300)
Increase (decrease) in Due to Parent, net					0
Payments of debt issuance costs				0	0
Cash paid to Parent related to the Spin-off					0
Cancellation of restricted stock awards for payroll tax withholdings on vested shares				0	0
Cash distributions to noncontrolling investors				(3,851)	(2,647)
Purchases of shares from noncontrolling investors					(12)
Changes in intercompany balances with affiliates, net				4,978	34,215
Net cash provided by (used in) financing activities				947	31,256
Net change in cash and cash equivalents				26	1,920
Cash and cash equivalents at beginning of period				348	582
Cash and cash equivalents at end of period		374	2,502	374	2,502
Eliminations [Member]
Condensed Cash Flow Statements Captions [Line Items]
Net cash provided by (used in) operating activities				0	0
Cash flows from investing activities:
Capital expenditures for property and equipment				0	0
Capital expenditures for software				0	0
Acquisitions, net of cash acquired				0
Proceeds from the sale of hospitals				0
Other investing activities					0
Changes in intercompany balances with affiliates, net				30,637	82,211
Net cash provided by (used in) investing activities				30,637	82,211
Cash flows from financing activities:
Borrowings (repayments) of revolving credit facilities, net				0
Borrowings of long-term debt				0	0
Repayments of long-term debt				0	0
Increase (decrease) in Due to Parent, net					0
Payments of debt issuance costs				0	0
Cash paid to Parent related to the Spin-off					0
Cancellation of restricted stock awards for payroll tax withholdings on vested shares				0	0
Cash distributions to noncontrolling investors				0	0
Purchases of shares from noncontrolling investors					0
Changes in intercompany balances with affiliates, net				(30,637)	(82,211)
Net cash provided by (used in) financing activities				(30,637)	(82,211)
Net change in cash and cash equivalents				0	0
Cash and cash equivalents at beginning of period				0	0
Cash and cash equivalents at end of period		$ 0	$ 0	$ 0	$ 0