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1. Company Snapshot

1.a. Company Description

Community Health Systems, Inc.owns, leases, and operates general acute care hospitals in the United States.It offers general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric, and rehabilitation services, as well as skilled nursing and home care services.


The company also provides outpatient services at primary care practices, urgent care centers, free-standing emergency departments, ambulatory surgery centers, imaging and diagnostic centers, retail clinics, and direct-to-consumer virtual health visits.As of December 31, 2021, it owned or leased 83 hospitals, including 81 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals with an aggregate of 13,289 licensed beds.The company was founded in 1985 and is headquartered in Franklin, Tennessee.

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1.b. Last Insights on CYH

Community Health Systems' recent performance was negatively impacted by lower adjusted admissions, which led to a Q4 earnings miss. The company's contract labor expenses are decreasing due to improving labor trends, but this may not be enough to offset the decline in admissions. Additionally, the company's divestiture of its stake in Cedar Park Regional Medical Center to Ascension Health for $460 million in cash may be a strategic move, but it also indicates a reduction in the company's assets and potential revenue streams.

1.c. Company Highlights

2. CHS Q3 2025 Earnings: Operational Improvements Drive Profitability

Community Health Systems' (CHS) third-quarter 2025 financial performance was marked by a reported gain from a $28 million settlement with prior litigation, contributing to an adjusted EBITDA of $376 million, with a margin of 12.2%, up 100 basis points year-over-year. Same-store net revenue improved 6% year-over-year, driven by rate growth, with net revenue per adjusted admission up 5.6%. The actual EPS came out at $1.27, significantly beating estimates at -$0.27763. The company's revenue growth was driven by a 1.3% increase in inpatient admissions and a 0.3% rise in adjusted admissions.

Publication Date: Oct -28

📋 Highlights
  • Settlement Gain:: $28 million gain recognized from prior litigation settlement.
  • Revenue Growth:: Same-store net revenue up 6% YoY; net revenue per adjusted admission rose 5.6%.
  • EBITDA Strength:: Adjusted EBITDA $376 million with 12.2% margin, +100 bps YoY.
  • Debt Reduction:: Leverage dropped to 6.7x from 7.4x year-end 2024 post $1.743B debt refinancing.
  • Free Cash Flow:: 9 consecutive quarters of positive adjusted free cash flow; 2025 target $1.50–$1.55B EBITDA.

Operational Highlights

The company continues to make targeted investments to advance its competitive position, including capacity and service line expansions. CHS is focused on five priority areas: quality, ratings, patient and physician experience, employee satisfaction, and free cash flow. They have made progress on quality and are now focusing on the others. The company has had 9 quarters of positive free cash flow trending and expects this to give them more opportunities.

Leverage and Capital Structure

Leverage was 6.7x, down from 7.4x at year-end 2024, driven by the company's continued efforts to deleverage. The company refinanced $1.743 billion of Senior Secured Notes due 2027 through the offering of $1.79 billion of 2034 notes, further optimizing its capital structure. CHS tightened its adjusted EBITDA range for 2025 to $1.50 billion to $1.55 billion, indicating confidence in its financial outlook.

Outlook and Guidance

The company expects continued upward pressure on medical specialist fees but remains confident in its ability to achieve positive free cash flow for 2025 after adjusting for cash taxes paid on divestiture gains. For 2026, headwinds and tailwinds include Medicare rate increases, potential supplemental payment programs, and growth investments. Analysts estimate next year's revenue growth at 1.9%, indicating a moderate growth trajectory.

Valuation and Metrics

With a P/E Ratio of 1.78, P/B Ratio of -0.62, and EV/EBITDA of 0.61, the market appears to be pricing in a relatively cautious outlook for CHS. However, the company's ROIC of 10.12% and a Free Cash Flow Yield of 48.39% suggest a strong underlying business. As CHS continues to invest in growth areas and optimize its capital structure, the current valuation metrics may present an opportunity for investors.

3. NewsRoom

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Community Health Systems Completes Sale of Select Outreach Laboratory Assets to Labcorp

Dec -02

Source: businesswire.com

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Is the Options Market Predicting a Spike in Community Health Systems Stock?

Nov -24

Source: zacks.com

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Community Health Systems, Inc. (CYH) Presents at UBS Global Healthcare Conference 2025 Transcript

Nov -11

Source: seekingalpha.com

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Community Health Systems Announces Participation in the 2025 UBS Global Healthcare Conference

Nov -05

Source: businesswire.com

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Community Health Systems Announces Definitive Agreement to Sell Ownership Interests in Clarksville, Tennessee, Hospital to Vanderbilt University Medical Center

Oct -30

Source: businesswire.com

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Community Health Systems Announces Definitive Agreement to Sell Three Pennsylvania Hospitals to Tenor Health Foundation

Oct -24

Source: businesswire.com

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Community Health Systems, Inc. (CYH) Q3 2025 Earnings Call Transcript

Oct -24

Source: seekingalpha.com

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Community Health Q3 Earnings Beat on Rising Same-Store Admissions

Oct -24

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.89%)

6. Segments

Managed Care and Other Third-party Payors

Expected Growth: 3%

The 3% growth in Managed Care and Other Third-party Payors from Community Health Systems, Inc. is driven by increasing enrollment in government-sponsored health plans, expansion of value-based care models, and strategic partnerships with payors to improve patient outcomes and reduce costs.

Medicare

Expected Growth: 2.8%

Medicare growth from Community Health Systems, Inc. is driven by an aging population, increasing healthcare utilization, and favorable reimbursement rates. Additionally, the company's strategic focus on quality care and cost management, as well as its expansion into value-based care models, contribute to the 2.8% growth rate.

Medicare Managed Care

Expected Growth: 2.9%

Medicare Managed Care from Community Health Systems, Inc. growth of 2.9% driven by increasing Medicare Advantage enrollment, expansion of value-based care models, and strategic partnerships. Additionally, demographic trends, such as aging population and rising healthcare demand, contribute to growth. Effective cost management and investments in digital health infrastructure also support this growth rate.

Medicaid

Expected Growth: 2.7%

Medicaid growth from Community Health Systems, Inc. is driven by increasing Medicaid expansion, favorable policy changes, and strategic hospital acquisitions. Additionally, the company's focus on improving operational efficiency and cost management has contributed to the 2.7% growth rate.

Self-pay

Expected Growth: 2.5%

Self-pay growth of 2.5% from Community Health Systems, Inc. is driven by increasing patient volumes, expansion of urgent care centers, and strategic partnerships with employers and payers. Additionally, the company's focus on improving patient engagement and digital health platforms has contributed to the growth.

7. Detailed Products

Hospital Operations

Community Health Systems, Inc. operates general acute care hospitals that provide a range of medical services, including emergency care, surgical services, and rehabilitation services.

Physician Practices

The company operates physician practices that provide primary care, specialty care, and urgent care services to patients.

Outpatient Services

Community Health Systems, Inc. offers outpatient services, including imaging, laboratory, and physical therapy services.

Home Health Services

The company provides home health services, including skilled nursing, physical therapy, and occupational therapy.

Ambulatory Surgery Centers

Community Health Systems, Inc. operates ambulatory surgery centers that provide outpatient surgical services.

8. Community Health Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Community Health Systems, Inc. faces moderate threat from substitutes, as patients have limited alternatives for hospital services, but some outpatient procedures can be performed in alternative settings.

Bargaining Power Of Customers

Community Health Systems, Inc. has a low bargaining power of customers, as individual patients have limited negotiating power, but large employers and insurers may have some bargaining power.

Bargaining Power Of Suppliers

Community Health Systems, Inc. faces moderate bargaining power of suppliers, as suppliers of medical equipment and pharmaceuticals have some negotiating power, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

Community Health Systems, Inc. faces a low threat of new entrants, as high barriers to entry, including regulatory hurdles and capital requirements, limit the likelihood of new hospital systems entering the market.

Intensity Of Rivalry

Community Health Systems, Inc. operates in a highly competitive industry, with many hospitals and health systems competing for patients, physicians, and market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 112.91%
Debt Cost 11.72%
Equity Weight -12.91%
Equity Cost 11.72%
WACC 11.72%
Leverage -874.57%

11. Quality Control: Community Health Systems, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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P3 Health Partners

A-Score: 4.6/10

Value: 9.8

Growth: 4.4

Quality: 2.9

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

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The Oncology Institute

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Value: 9.4

Growth: 3.2

Quality: 4.4

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

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DocGo

A-Score: 4.1/10

Value: 9.8

Growth: 8.3

Quality: 4.4

Yield: 0.0

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Volatility: 2.0

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Sonida Senior Living

A-Score: 3.9/10

Value: 5.8

Growth: 2.7

Quality: 2.1

Yield: 0.0

Momentum: 7.5

Volatility: 5.3

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American Oncology Network

A-Score: 3.5/10

Value: 3.6

Growth: 4.2

Quality: 2.8

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

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Community Health Systems

A-Score: 3.5/10

Value: 10.0

Growth: 2.7

Quality: 5.8

Yield: 0.0

Momentum: 1.0

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.57$

Current Price

3.57$

Potential

-0.00%

Expected Cash-Flows