With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

Fortune Sector Leaders: Health Care

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500 2021-Community Health Systems

One of the nation’s leading operators of general acute care hospitals, where patients receive short-term treatment for serious illness or injury, CHS runs more than 80 facilities in 16 states predominantly located across the southern U.S.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-241-Community Health Systems

One of the largest operators of acute care hospitals in the U.S., its network includes 97 hospitals in 17 states, downsizing slightly over the past year.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

Fortune Global 500

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

World's Most Admired Companies

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Nine Key Attributes Of Reputation

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of products / services

Global Competitiveness

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Founded in 1985 and headquartered in Franklin, Tenn., CHS owns, leases, and operates general acute-care hospitals across the U.S. It offers wide-ranging diagnostic, medical, and surgical services for inpatients and outpatients.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Community Health Systems (CYH): Company Profile, Stock Price, News, Rankings

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Community Health Systems

community health systems

Hello, everybody, and thank you for holding. Today's call will begin in five minutes. Once again, thank you for holding, and today's conference will begin shortly. Thank you. Good morning, and welcome to the Community Health Systems fourth quarter and full year 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. We do ask you, please limit yourself to one question and a single follow-up. Please also note today's event is being recorded. I would now like to turn the conference over to Anton Hie, Vice President, Investor Relations. Please go ahead.

Thanks, Rocco. Good morning, and welcome to Community Health Systems fourth quarter 2025 conference call. Joining me on today's call are Kevin Hammons, Chief Executive Officer, and Jason Johnson, Executive VP and Chief Financial Officer. Before we begin, I'll remind everyone this conference call may contain certain forward-looking statements, including all statements that do not relate solely to historical or current facts. These forward-looking statements are subject to a number of known and unknown risks, which are described in headings such as Risk Factors in our annual report on Form 10-K and other reports filed with or furnished to the SEC. Actual results may differ significantly from those expressed in any forward-looking statements in today's discussion. We do not intend to update any of these forward-looking statements.

Yesterday afternoon, we issued a press release with our financial statements, and definitions and calculations of Adjusted EBITDA and Adjusted EPS. We've also posted a supplemental slide presentation on our website. All calculations we will discuss today exclude gains or losses from early extinguishment of debt, impairments of gains or losses on the sale of businesses, expense from business transformation costs, and changes in estimates for professional claims liability in the prior year period. With that said, I will turn the call over to Kevin Hammons, Chief Executive Officer.

Thank you, Anton. Good morning, everyone, and thank you for joining our fourth quarter 2025 conference call and for your continued interest in CHS. First, I'd like to say I'm honored to speak to you today as CEO of Community Health Systems. I want to express my sincere gratitude to our board of directors for their support and their confidence in appointing Jason and myself to our permanent roles as CFO and CEO, respectively. I would also like to thank many of the people on this call for offering your support and congratulations, which has meant so much to me personally. Of course, I want to acknowledge our employees and physicians and everyone else who contributes to the quality care provided for our patients every day.

It is my honor and privilege to lead CHS forward at this point in time and to serve all of you in this role. Reflecting on these past few months, I used my time as interim CEO to speak with many of our employees and physicians, and most importantly, to listen to their thoughts about our current state, and future potential of our company. The feedback was candid, and enlightening and encouraging, and I entered this year excited and very optimistic about what lies ahead for CHS. Today, I want to share some highlights of our 2025 operating results, but I also want to spend a minute talking about our vision and our top priorities for this year before turning the call over to Jason.

Starting with our operating performance, the fourth quarter was in line with our updated expectations, reflecting sequential margin expansion with higher acuity, and a slight improvement in payer mix and continued cost controls. Same-store net revenue for the fourth quarter increased 2.1% year-over-year, reflecting a 2.4% increase in net revenue per adjusted admission. Some of our milestone achievements in 2025 were very much the result of focusing on the unique opportunities available in each of our markets. For example, ER visits were up more than 13% at our Knoxville hospitals over the past two years, following a major investment in ER expansion at Tennova North Knoxville in 2024.

A current investment at Tennova Turkey Creek in Knoxville, which will be completed this summer, will add more ER visits to the community and drive even more growth to our Tennessee hospitals. A 20% increase in births, more than 4,000 babies born at Grandview Medical Center in Birmingham, Alabama, in 2025, was made possible by a recent $10 million investment in women's services. That is the third expansion of women's services and maternity care services since we opened Grandview 10 years ago. In Carlsbad, New Mexico, more than 450 inbound transfers, a nearly 35% increase over the prior year, brought patients into our hospital for higher acuity care, coming from outlying communities as far as 30, 50, and even 100 miles away.

In Longview, Texas, heart surgeries were up 16% in 2025 as we developed a top-notch heart program that keeps patients close to home for high quality, high acuity cardiac care. These are just a few examples of how we seek to understand and address the healthcare needs in our communities, and invest in our core portfolio for long-term growth. We also made several divestitures in 2025, enabling us to invest proceeds back into our core portfolio or use them to reduce debt. We continue to make improvements to our capital structure, with leverage down from 7.4 times at year-end 2024 to 6.6 times at year-end 2025, thus making materially more values available to our stockholders.

With proceeds from transactions completed or due or to be completed in 2026, we are creating a path for additional debt reduction, and deleveraging, which will further strengthen our balance sheet, and continue to improve our capital structure. As we discussed in prior quarters, and has been discussed more broadly across our industry, we saw some disruptions in 2025, both from an economic standpoint, impacting patient behavior, as well as a regulatory standpoint, creating uncertainty in both reimbursement and insurance coverage. We believe these disruptions are temporary, and there are plenty of things we can be doing and that we are doing to mitigate risks and ensure we are well-positioned for the future. Finally, our vision at CHS is to make the healthcare experience exceptional for our patients, our communities, and each other. We know this is aspirational, but also believe it's possible and attainable.

To achieve this goal, a healthcare experience that is exceptional, we have adopted five priorities. We intend to improve quality, physician experience, patient experience, and employee satisfaction... and to grow our cash flows, enabling us to continue to invest in additional growth opportunities. We are working to differentiate ourselves in our markets, and we believe doing so will lead to even greater consumer confidence and choice of our health systems, retention of our workforce, growth, and ultimately, enhanced financial performance and long-term success. At this point, I will turn the call over to our Chief Financial Officer, Jason Johnson, to review financial results in greater detail and discuss our initial guidance for 2026. Jason?

Thank you, Kevin, and good morning, everyone. For the fourth quarter, CHS delivered results generally consistent with expectation. The company continued to execute well on the controllable aspects of the business and was able to deliver expansion in adjusted EBITDA margin, margin on a sequential basis, thus achieving the midpoint of our updated guidance for the full year 2025. Adjusted EBITDA for the fourth quarter was $395 million, with a margin of 12.7%. When adjusting for divestitures and added period items, adjusted EBITDA was up slightly versus the fourth quarter of 2024. Same-store net revenue for the fourth quarter increased 2.1% year-over-year, driven primarily by rate growth and a slight improvement in acuity, as net revenue for adjusted admission was up 2.4% year-over-year.

Same-store inpatient admissions and adjusted admissions were each down 0.3%. Same-store surgeries declined 1.9%, and ED visits were down 3.6%. When excluding the Pennsylvania operations that were divested on February 1, 2026, same-store admissions and adjusted admissions were flat year over year, and surgeries were down 0.4%. Meanwhile, CHS again performed well on cost controls. Labor was well managed, with growth in average hourly rate-wage rate coming in within our expected range for the quarter and the full year, and contract labor spend was essentially flat on both a sequential and year-over-year basis. The supply expense continued to be well managed, declining 110 basis points year over year to 14.4% of net revenue in the fourth quarter and down 50 basis points for the full year 2025.

Medical specialist fees were $169 million in the fourth quarter, which was up 4.6% year-over-year on a same-store basis and held steady with recent quarters at 5.4% net revenue. We continue to expect upward pressure on medical specialist fees in excess of typical inflation, likely in the range of 5%-8% growth for 2026, driven by radiology and anesthesia. As we previously noted, we have seen operational improvements in areas such as throughput and safety metrics and physician practices that the company has insourced, and we will continue to evaluate insourcing opportunities to combat this upward cost pressure when appropriate. Cash flows from operations were $266 million in, for the fourth quarter, bringing the full year total to $543 million versus $480 million in 2024.

Cash flows from operations for the full year of 2025, as reported, includes $159 million in outflows for taxes on gains on sales of hospitals, which are paid out of divestiture proceeds that are reported as investing cash flows. When excluding these cash taxes on divestiture gains, our adjusted cash flows from operations were $712 million for 2025, and adjusted free cash flows were $150 million. As expected, during the fourth quarter, CHS received $91 million in contingent cash consideration related to the 2024 divestiture of Tennova Cleveland, and net cash proceeds of approximately $152 million from the divestiture of our outreach lab assets.

We used a portion of these proceeds to redeem $223 million of the 10 and 7/8 senior secured notes due 2032 at 103 via a special call provision, and also redeemed the remaining $14 million outstanding principal amount of the 2027 notes in mid-December. Subsequent to year-end, in early February, we completed the divestiture of our 80% ownership in Tennova Healthcare-Clarksville in Tennessee for $623 million in gross proceeds and the three Pennsylvania hospitals for $33 million in cash, plus a $15 million promissory note and additional contingent consideration. We used a portion of these proceeds to redeem another $223 million of the 2032 notes at 103 via the special call provision on February 2nd.

As Kevin previously noted, our leverage at year-end 2025 was 6.6 times, down from 7.4 times at year-end 2024, and has since been further reduced by the second partial redemption of the 2032 notes earlier this month. We have simplified our capital structure by effectively eliminating unsecured notes in the second quarter of 2025. Our next significant maturity is in 2029, and as of December 31, 2025, we had no amounts drawn on our ABL. The previously announced divestiture of our Huntsville, Alabama, assets is on track to close in the second quarter and is expected to bring in an additional $450 million in gross proceeds, further enhancing liquidity to fund growth investments and/or further reduce net debt and leverage.

It is worth noting that once the Huntsville divestiture is complete, our net debt will be approximately $9.2 billion, down from the $10.1 billion at year-end 2025 and the $11.4 billion at year-end 2024. Now moving on to our initial 2026 financial guidance. We anticipate net revenue of $11.6-$12.0 billion, Adjusted EBITDA of $1.34-$1.49 billion, cash flows from operations of $600-$700 million, and capital expenditures of $350-$400 million.

The guidance range with net revenue. and adjusted EBITDA, both coming in below full year 2025 levels, reflects the impact of divestitures completed in 2025, and those that have been announced and have been or are expected to be completed in early 2026, as well as the exclusion of one-time or out-of-period items that benefited 2025 results and are not expected to recur in 2026. In bridging from 2025 actuals to 2026 EBITDA guidance, the biggest factors are, of course, the divestitures. For those we completed during 2025, which includes Cedar Park, Lake Norman and ShorePoint, the partial year impact that you have to take out of our as-reported EBITDA in 2025 is about $30 million-$40 million. I'm sorry. Yes, $30 million-$40 million.

For the class of 2026 divestitures, which includes Clarksville, Pennsylvania, and Huntsville, it's in about $80 million-$90 million reduction to the baseline. And then, as you recall, we had the retroactive piece related to Tennessee, SDP, and the opioid settlement, which together added about $45 million of EBITDA in 2025. So after adjusting for all these factors, we view the starting point for 2025 as EBITDA of about $1.36 billion. Off that base, our initial guidance range for 2026 reflects core operations of about 4%, which is net of an estimated $20 million-$30 million EBITDA impact resulting from the reduction of HIX enrollment.

Our guidance does not include impacts from any new or enacted state-directed payment programs that may still be waiting approval, and likewise, does not include any benefits from the Rural Health Transformation Program, as the states in which we operate are still in various stages of finalizing their program designs. Additionally, the guidance considers only the impact of divestitures that have already been completed or announced to date. Any such additional transactions, if completed during 2026, would reduce net revenue and EBITDA for the year, and the associated proceeds would enable the company to further reduce net debt and leverage. A final note, for many employers on a biweekly pay schedule, 2026 will include an extra pay period, meaning there will be 27 payment dates compared to the normal 26 payment dates.

CHS is in this category, so while this has no impact to Adjusted EBITDA, it will be an approximate $140 million headwind to cash flows from operations in 2026 and is reflected in the guidance range. This concludes our prepared remarks. So at this time, we'll return the call back over to the operator for Q&A. Rocco?

Yes, sir. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. Once again, we do ask that you please limit yourself to one question and a single follow-up. Today's first question comes from Brian Tanquilut with Jefferies. Please go ahead.

Hey, good morning, guys. Thanks for all the color on the bridge. So maybe since you already gave us that, I'll shift my question to just as I think about the divestitures, right? I mean, you've announced a few that are pending here, obviously based on the guidance. But how do we think about, you know, your perspective in terms of further divestitures? And, you know, as you've pruned the portfolio, you now have an asset base that is comprised of fairly good hospitals. So what's the philosophical view in terms of what is left to sell and how that impacts, you know, go forward performance? And then just how much more are you willing to prune the hospital base from here?

Hey, Brian, this is Kevin. I'll kick this off, and thank you for your question and for joining us today. We are getting, I would say, closer to the end of our, you know, programmatic divestitures. We still have some inbound interest as we continue, you know, and probably will always have some inbound interest because we have some very good markets. There are a couple transactions right now that we are in some early stages of discussions, but we are not sure yet whether those will proceed or whether we will be able to get those across the finish line. But I would say in terms of what we have, the interest in selling is certainly dwindling.

We're very comfortable with our portfolio as it stands, and we really want to be just opportunistic about, you know, transacting hospitals, that if there were ever to be a change in the economic environment or environment in which, you know, we're operating, that would cause us to want to make a decision to divest, or if it's just an opportunistic transaction at a price point that would allow us to materially deleverage, then I think we would wanna take advantage of that.

 No, I appreciate that. And then, hey, Jason, as I think about your bridge that you provided, when I think of the HIX adjustment there, just curious if you could share with us, you know, the assumptions that you've embedded in that number. You know, whether it's shifting to bronze and employer plans or just curious if there's anything you can share with us on that. Thanks.

Yeah, sure. Thank you for the question. You know, as a reminder, healthcare exchanges represent less than 5% of our total adjusted admissions and net revenue. And our guidance does attempt to account for the potential impact from the reductions in enrollment and healthcare, health insurance exchanges related to the administrative reforms, expirations of enhanced premium tax credits, et cetera. Obviously, it's difficult to predict currently what the ultimate outcome will be, which will be highly dependent upon the ACA plan effectuation rates, potential uptake into the employer-based plans, shifting into lower metal tier plans or becoming self-pay, and the success of our company's eligibility screening services and assisting uninsured patients with obtaining coverage. We acknowledge, as other peers have, there could be some negative impact to volume trends and payer mix.

A 20% reduction in CHS volumes would result in a $100 million-$120 million reduction in net revenue. Based off of that, we're kicking off 2025 after excluding the divestitures. And we think that could translate into a $20 million-$30 million reduction in EBITDA.

Thank you. Our next question today comes from A.J. Rice at UBS. Please go ahead.

Hi, everybody. Maybe first, just ask, I don't think I've asked about this in a while. The portfolio is obviously quite diverse. You have mid-sized city markets that make up a lot of the portfolio, but you also have a number of small community properties still. Has there been a meaningful difference in the way one side or the other of the portfolio, I'm probably gonna ask you geographically as well. Do you see meaningful difference as to how within the portfolio assets are performing over the course of the last quarter to last year? Any thoughts on that?

Thanks, A.J. You know, we do have a fairly wide range of performance across our portfolio. But you know, as we have trimmed and focused on networks of care, most of those hospitals, and even the smaller, more rural hospitals, fit within a network that includes a hospital in a larger suburban or mid-sized metropolitan area. And those smaller hospitals, although individually or on their own, may operate at a different level, also serve as an access point or transfer point for higher acuity services that we're still able to capture within the network.

So really, as we're looking at and evaluating our portfolio, we've been divesting many more of the hospitals that kind of stand on their own, where we don't have a network of care built up around it and focusing our efforts on those networks.

Okay. And then maybe for the follow-up, I know you swung free cash flow positive. Congratulations, it's been a while for that, so that's a good thing. I wonder, when you look at that, does that change your view on capital spending? We certainly are hearing a lot about AI and how hospitals could benefit from AI. What are you doing there, and will that be a focus of spending?

Sure, happy to address those. And thank you for recognizing that. It has been something we've been working towards, and knowing we needed to get there. And it, you know, we're glad to say that we kind of turned the free cash flow positive this year, as a result of a number of initiatives, including the divestiture program, which has helped us, you know, reduce some of our cash interest, and has gotten rid of some of our cash flow headwinds. As we move forward, and as you saw in the guidance, our capital spending levels really are not changing from an absolute dollar amount from what we have spent these past couple years, even though we have a smaller footprint of hospitals.

So we're spending more per hospital, going forward, and I think we're able to do that now that we're improving our cash flow. Those improvements allow us to invest in some additional growth opportunities. And then, as you mentioned, as we look at AI, there's a number of use cases that we're already investing in for AI, that we're already using and some additional ones on the horizon. Many of those focus in some administrative areas that should drive some cost savings even in our revenue cycle, whether it's in the -- we're using some AI in appeals process, some autonomous coding in our prior authorization process. We've also implemented some AI or an AI-augmented tool...

for virtual, virtual patient sitters, that has helped prevent falls and serious safety events. That's a little more on the clinical side. We're in the process of rolling out ambient listening, and some AI virtual assistants to improve documentation accuracy. And then we have some even more on the clinical side, with some AI-enabled maternal-fetal early warning systems that improve obstetric outcomes. So we're looking at it across the portfolios. And then, as we've talked a lot over the last couple years about our ERP, the Oracle tools, from an administrative standpoint and process transactions are having more and more AI built into the software that will be available to us as we continue to mature our processes, with our ERP.

Thank you. Our next question today comes from Ben Hendrix at RBC. Please go ahead.

Great, thank you very much. I wanted to step back to the guidance bridge a little bit and kind of back it up to those elements to revenue, just so we can get an idea of the pass-through provider tax on that, on that one time Tennessee DPP item, and then also profitability of the divestitures. If we could just get the bridge for revenue. Thanks.

Sure, Ben. Thank you for the question. So I'll kind of walk through, starting with the divestitures. For 2025, the partial year impact, that again, that's ShorePoint, that was divested on March 1, Lake Norman on April 1, and Cedar Park on June 30. That's about $210 million-$230 million of net revenue to take out of 2025. And then for those divestitures that have been announced and have been completed or expected to be completed in early 2026, that's about a $1 billion reduction to net revenue. But keep in mind, the three Pennsylvania hospitals that we divested on February 1 generated a lot of net revenue, about $500 million annually, but they were basically break even to EBITDA.

And then the two one-time items, the Tennessee SDP, the retroactive piece there, and the opioid settlement, that was about $60 million net revenue. So if you kind of factor in all those items, then the jump off point for 2025, net revenue was about $11.2 billion.

Great, that's very helpful. And then, just in terms of the core growth that you're projecting, if we think about the kind of consumer confidence issue that Kevin raised on his prepared remarks, how are we thinking about the impact thereof that kind of early year mix shift and how it could impact the pacing through the year? Thanks.

Hey, Ben, this is Kevin. Yeah, so coming, you know, out of 2025, we saw a dip in consumer confidence in December, you know, down to the level that, you know, the last time we saw that, I think, was in March of 2025. And following that, we had kind of a pretty soft quarter in terms of volume. So, starting off the year, I think you're gonna see, you know, a little bit of headwind, not only with the reset of co-pays and deductibles, but consumer confidence being light. We do think that's temporary. We think that'll, you know, improve throughout the year.

As I think about kind of cadence throughout the year, although we don't give quarterly guidance, I would expect the back half of the year to be a little stronger than the first half of the year in terms of EBITDA production.

Thank you. And our next question today comes from Jason Cassorla with Guggenheim. Please go ahead.

Great, thanks. Good morning. Maybe if just going back, you noted the exchange headwind on EBITDA to be $20 million-$30 million. I guess if you were just to back that out, you're suggesting close to, I call it, like, 6% same facility EBITDA growth for the remaining business. Can you walk us through that growth rate? Is that, you know, more in power flow through? Is that favorable Medicare rates? Just any thoughts there, when you kind of back out the exchange and the remaining business would be helpful.

Sure. Thanks, Jason. The pure rate increase assumption there is about 2.5%-3.5% of the growth, and the remainder is a mix of payer mix, acuity, and volume to get to that, so about 5.3% increase.

Yeah, I might just add, if I can jump in with some color, too. If you think about Medicare rates this year, you know, we're looking on the inpatient side, about a 4% Medicare rate increase for 2026. That, that's the highest rate we've seen, or the highest increase we've seen in Medicare, in as long as I can remember. So that's gonna be, you know, helpful. This will help drive... You know, we did see some pretty good rate increase in fourth quarter. That Medicare inpatient rate went into effect October first. So we do think that will pull through and-...

As well as some of the capital and growth investments that we've made throughout this past year, will also be helpful in driving some higher acuity services and some payer mix improvements.

Great, thanks. Very helpful. And maybe just to follow up on the divestiture front, I mean, you know, your hospital footprint's down about a third, right, since 2019. I guess, you know, as you evaluate the future deals or opportunities, like, how are you factoring any potential headwinds that may come from fixed cost leverage leakage as your facility base gets smaller? Just curious how you're thinking about that and how you're factoring that as you look to perhaps sell more assets. Thanks.

Yeah, we keep a close eye on our overhead costs here, and I think our overhead costs, you know, we've been very efficient with those costs. Many of our centralized services are volume related, like revenue cycle, like our new shared business center, where we've moved accounting, finance, HR, now that we've put in a new ERP. All of those things can be flexed because they're very transactional related. So as we divest facilities and reduce the number of transactions we're processing, we can scale those accordingly. Also keep in mind, we've been adding significant numbers of beds to our existing hospitals, even though we've been divesting some hospitals with our capital projects over the last several years.

I think over the last, maybe 3-4 years, we've added 500-600 beds to our core portfolio. We're adding freestanding ED, surgery centers, clinics, and we would continue to be looking at opportunities to do that. If you go back in 2019, our net revenues, I think, were approximately $13 billion. And to your point, we've sold about 35% of our portfolio, but our net revenues this past year were $12.5 billion. So, and the EBITDA is also relatively close, even though we have 35% fewer facilities. So that's kind of how we're looking at it.

Thank you. Our next question today comes from Josh Raskin at Nephron Research. Please go ahead.

Hi, thanks. I just wanted to go back to that technology agenda that you're talking about, and maybe if you could give a little more details around some of the system changes, the ERP and how that's gone, and, you know, where you're targeting more, you know, additional efficiencies and savings in light of some of the divestitures. And then I'm curious, any new efforts around revenue optimization or any, anything else on the revenue side?

Thanks, Josh. You know, the ERP implementation and transformation, I would say, went extremely well. It was a multiyear process and one that was a big heavy lift for us as an organization. But we did complete that on time, and we fully went live across the entire portfolio effectively January first of 2025. So we've been up now for a full year on the new systems. They are working, you know, as designed.

We did not have any issues in terms of, of, you know, closing our books or any expense issues that were, of a surprise or that came through that got identified as often as times the case when you go through a big system conversion like that, you find things, and, and we did not find any big surprises. We are still in the process of what I would call maturing the new system. We've had some big successes. By our tracking, it has saved us approximately $50 million this past year. And I think there's runway over the next couple years for us to continue to increase the savings that we're getting out of that. Now, those savings have come from a couple different areas.

One, it's been reducing the number of other systems. So we've replaced multiple systems, multiple financial platforms with a single platform, and as we get rid of some of those duplicative systems, you know, we're saving money. We are getting better decision support. We have better insights now that we have a single integrated system, and standardized data across the entire enterprise. So we're able to see more, for instance, in the supply chain area. We have a single item master across the entire enterprise, and, you know, pick an item that you purchased, we have almost instantaneous visibility to how many of those items are purchased across the entire system, as opposed to trying to cobble together multiple systems to see, you know, what we purchased of a single item.

So that all provides better decision support, allows us to leverage our scale better. And as that whole process matures, we believe we'll be able to extract more savings, going forward. Then, with the AI components that are baked into the new platform and that are being rolled out, a lot of this AI was not in Oracle when we initially acquired and began implementing it. But as Oracle is building out their product, and now that we're in a kind of a cloud environment, we get updates every quarter with new functionality. They're rolling out new functionality that we can then take advantage of going forward. That will allow us to be able to gain significant efficiencies, that I would expect in 2026 and forward, that we'll be able to take advantage of.

Perfect. Anything new on the revenue side from a tech perspective?

Yes. On the revenue side, we're continuing to—and as I mentioned, we're already using some AI in our appeals process and some autonomous coding. We're looking at some additional use cases to further expand some of those products. And some of the software that we're using in our revenue cycle is also, those vendors are building out some AI technology or components within their products that we'll be able to take advantage. This should help us with charge capture and as well as some prior authorization.

Thank you. Our next question today comes from Andrew Mok with Barclays. Please go ahead.

Hi, good morning. Wanted to follow up on the ACA headwind. The $20-$30 million EBITDA call-out strikes me as a bit low on a potential $100-$120 million impact to revenue. So can you help us understand the offsetting factors there, and whether that headwind figure is net of any planned cost reductions? Thanks.

Yeah. Hi, sure. So—I mean, first, the deductibles and copays that those patients have are generally, we don't collect many of those. And so the $20 million-$30 million was, you know, we started by applying with our, their normal 12% EBITDA margin, but then recognizing that there's some fixed costs that remain, we took that up to more the $20 million-$30 million range. You know, because obviously you don't incur the cost if those patients don't present any supplies, salaries, et cetera.

Yeah, I would just add on to that, and I think Jason brought up a very good point, that you know, our experience has been that a number of the utilization of health insurance exchange patients is in the ED. And oftentimes, those individuals do not pay their copays and deductibles. Our collection of copays and deductibles is very low on that group of patients. So factoring that in, we don't believe that there's as big of a headwind for that business of being walking[UNCERTAIN].

Got it. Okay. And if I could follow up on the cash flow. The operating cash flow guidance seems to embed a meaningfully positive contribution from working capital, despite the negative call-out on the extra payroll cycle. Can you help us understand what's driving that favorable contribution? Thanks.

Sure. There's probably five to seven different items that we've identified, categories, to step over that additional pay period. One is improving our AR collections and as well to reduce by a day. AP remains a focus. We did have, in 2025, some payments of AP from our conversions from old systems that built up and were paid earlier in the year that we shouldn't have to step over in 2026. And then also just focusing generally on AP management. Inventory turnover is a focus of ours. Again, this is kind of that next step of being on a single ERP and maturing our processes.

We've got expect a lower amount of payments in medical malpractice, and there's continued collections on the divested AR that we don't sell to the buyers. So while we won't have that income coming in, we'll continue to collect on the AR, the cash will still come in. And then there's always the state directed payment program timing as to when the payments come in versus the recognition of the revenue.

Thank you. Our next question today comes from Steve Baxter at Wells Fargo. Please go ahead.

Yeah. Hi, thanks. Not to belabor the exchange points too much. I guess I'm just trying to understand a little bit better. You know, on one hand, you know, I think everyone kind of understands that this exchange population does feel like there is a great deal of ER utilization happening. I guess I'm just wondering, when you think about, you know, sort of the decremental margins here, just philosophically, it seems like in a lot of these situations, you might actually keep the cost. People continue to use the ER, but just don't actually have the revenue anymore associated with that. So just trying to understand, I guess, why you wouldn't see a much potentially higher decremental revenue drop through on that.

And then maybe just to help kind of square it, like, what percentage of the exchange enrollment loss do you assume goes to other coverage sources? Thank you. I didn't catch the last part of that.

Yeah, I think the last part was that, what percentage do you expect to, do we expect-

Yeah, like, if you expect the exchange market to shrink 20%, like, of that shrink, how much of that do you think ends up in another source of coverage? Therefore, like, what percentage of this starting-

100 to 120 just kind of is not an issue to deal with at all. And then of what's left, that's kind of where the question on the avoided cost and the decremental margin comes in. Thank you.

Yeah. It's frankly a little too early to really accurately predict what's ultimately gonna happen with these folks, if they'll just be able to pay their own premiums or if they'll downgrade, with all the things that we talked about earlier, or if they'll just go self-pay and not be able to get coverage. So we didn't attempt to determine exactly how much is gonna come back in, because this kind of came back to ultimately it's less than 5% of our net revenue. So when we were kind of sizing it, we took an approach of starting there and using the just starting at 20% and trying to apply what kind of margin that could end up flowing down to.

We're generating a relatively low margin on that business to begin with. And to your point, you know, some of those folks that lose or drop out of the exchange will actually come back with commercial coverage that we'll get a better margin on, if they're commercially covered. Some of them may move into Medicaid, some of them may move into uninsured status. We took a blended rate of 20%. But as we think about, given the fact that a lot of the copays are not collected, our current margin on that business is pretty low. So that's where we came up with, you know, a 20%-30% EBITDA hit on that revenue.

Got it. And then, just to follow up, I think you might have said this, but just to clarify, the same store volume growth assumption that's embedded in this guidance, and then as we think about, you know, the step from the same store volume growth this year to what you're looking for in 2026, like, what payer category should we think about as driving that step up? Thank you.

The same store volume growth would be low single-digit expectation for 2026.

What was the second part of that question, Steven? Sorry.

Yeah, just to the extent you were looking for improvement, like what, what payer classes you might call out as expecting a better volume performance than what you actually realized in 2025?

Certainly commercial. You know, I think we saw some improvement in, in commercial mix this year. And as we think about, you know, where we are making some of our capital investments and service line investments, we would anticipate capturing both some additional Medicare, but also commercial business continuing to ramp up.

Thank you. That concludes our question and answer session. I'd like to turn the conference back over to Mr. Hammons for any closing remarks.

Rocco, thank you. Thank you everyone for joining the call today. I want to close by reiterating my thanks for our team members, for their commitment to our shared vision for CHS, and their combined efforts in putting our values into action. If you have additional questions, you can always reach us at 615-465-7000. Have a good day, everyone.

Thank you, sir. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Community Health Systems (CYH) Q4 2025 Earnings Call Transcript

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