Community Health Systems, Inc. Announces Third Quarter 2012 Results With Net Operating Revenues Of $3.2 Billion

Commenting on the results, Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems, Inc. said, “Community Health Systems delivered another strong financial and operating performance in the third quarter of 2012. Operating revenue increased nine percent and adjusted EBITDA increased five percent over the prior year period. We continue to demonstrate favorable results on a same-store basis with revenues up four percent and volume trends stabilizing. Our standardized business platform has enabled us to reduce costs, recruit qualified physicians and improve local hospital services.

“We are also pleased that over the last several months we have extended almost all of our long-term debt. We have laddered our maturities to 2017, 2018, 2019 and 2020,” added Smith.

Included on pages 14, 15 and 16 of this press release are tables setting forth the Company’s updated 2012 annual earnings guidance.

Located in the Nashville, Tennessee, suburb of Franklin, Community Health Systems, Inc. is one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute-care hospitals in non-urban and mid-size markets throughout the country. Through its subsidiaries, the Company currently owns, leases or operates 135 hospitals in 29 states with an aggregate of approximately 20,000 licensed beds. Its hospitals offer a broad range of inpatient and surgical services, outpatient treatment and skilled nursing care. In addition, through its subsidiary, Quorum Health Resources, LLC, the Company provides management and consulting services to non-affiliated general acute-care hospitals located throughout the United States. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol “CYH.”

Community Health Systems, Inc. will hold a conference call on Wednesday, October 31, 2012, at 11:00 a.m. Central, 12:00 p.m. Eastern, to review financial and operating results for the third quarter ended September 30, 2012. Investors will have the opportunity to listen to a live internet broadcast of the conference call by clicking on the Investor Relations link of the Company’s website at www.chs.net, or at www.earnings.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will continue to be available through November 30, 2012. Copies of the Company’s current report on Form 8-K (including this press release) and conference call slide show will be available on the Company’s website at www.chs.net.

Forward-Looking Statements

Statements contained in this press release regarding expected operating results, acquisition transactions or divestitures and other events are forward-looking statements that involve risk and uncertainties. Actual future events or results may differ materially from these statements. Readers are referred to the documents filed by Community Health Systems, Inc. with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K, current reports on Form 8-K and quarterly reports on Form 10-Q. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. The Company undertakes 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.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Financial Highlights (a)(b) (in thousands, except per share amounts) (Unaudited)
		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2012			2011				2012				2011
Net operating revenues		$	3,212,030		$	2,945,477			$	9,752,039			$	8,900,387
Adjusted EBITDA (c)			477,254			453,512				1,495,843				1,372,883
Income from continuing operations (d), (e), (f), (g), (h)			58,758			95,800				260,643				280,279
Net income attributable to Community Health Systems, Inc. stockholders			44,233			74,304				203,066				171,017
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (d), (e), (f), (g), (h)		$	0.50		$	0.87			$	2.29			$	2.51
Discontinued operations			-			(0.04	)			(0.01	)			(0.62	)
Net income		$	0.50		$	0.83			$	2.28			$	1.89
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (d), (e), (f), (g), (h)		$	0.49		$	0.86			$	2.27			$	2.49
Discontinued operations			-			(0.04	)			(0.01	)			(0.61	)
Net income		$	0.49		$	0.83			$	2.27			$	1.87
Weighted-average number of shares outstanding (i):
Basic			89,260			89,412				89,028				90,514
Diluted			90,009			89,858				89,465				91,256
Net cash provided by operating activities		$	294,938		$	235,550			$	777,865			$	820,235
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (a)(b) (in thousands, except per share amounts) (Unaudited)
		Three Months Ended September 30,
		2012							2011
		Amount				% of Net Operating Revenues			Amount				% of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts)		$	3,696,661						$	3,395,773
Provision for bad debts			484,631							450,296
Net operating revenues			3,212,030			100.0	%			2,945,477			100.0	%
Operating costs and expenses:
Salaries and benefits			1,525,111			47.5	%			1,393,151			47.3	%
Supplies			484,212			15.1	%			459,146			15.6	%
Other operating expenses			694,857			21.6	%			623,608			21.2	%
Electronic health records incentive reimbursement (f)			(30,622	)		-1.0	%			(40,227	)		-1.4	%
Rent			68,637			2.1	%			64,481			2.2	%
Depreciation and amortization			182,207			5.7	%			161,515			5.5	%
Total operating costs and expenses			2,924,402			91.0	%			2,661,674			90.4	%
Income from operations (f), (g), (h)			287,628			9.0	%			283,803			9.6	%
Interest expense, net			158,565			5.0	%			159,480			5.4	%
Loss from early extinguishment of debt			52,024			1.6	%			-			0.0	%
Equity in earnings of unconsolidated affiliates			(7,419	)		-0.2	%			(8,194	)		-0.3	%
Income from continuing operations before income taxes			84,458			2.6	%			132,517			4.5	%
Provision for income taxes			25,700			0.8	%			36,717			1.2	%
Income from continuing operations (f), (g), (h)			58,758			1.8	%			95,800			3.3	%
Discontinued operations, net of taxes:
Loss from operations of entities sold			-			0.0	%			(3,103	)		-0.2	%
Impairment of hospitals sold			-			0.0	%			-			0.0	%
Loss on sale, net			-			0.0	%			(66	)		0.0	%
Loss from discontinued operations, net of taxes			-			0.0	%			(3,169	)		-0.2	%
Net income			58,758			1.8	%			92,631			3.1	%
Less: Net income attributable to noncontrolling interests			14,525			0.4	%			18,327			0.6	%
Net income attributable to Community Health Systems, Inc. stockholders		$	44,233			1.4	%		$	74,304			2.5	%
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (f), (g), (h)		$	0.50						$	0.87
Discontinued operations			-							(0.04	)
Net income		$	0.50						$	0.83
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (f), (g), (h)		$	0.49						$	0.86
Discontinued operations			-							(0.04	)
Net income		$	0.49						$	0.83
Weighted-average number of shares outstanding (i):
Basic			89,260							89,412
Diluted			90,009							89,858
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (a)(b) (in thousands, except per share amounts) (Unaudited)
		Nine Months Ended September 30,
		2012							2011
		Amount				% of Net Operating Revenues			Amount				% of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts)		$	11,226,580						$	10,183,654
Provision for bad debts			1,474,541							1,283,267
Net operating revenues			9,752,039			100.0	%			8,900,387			100.0	%
Operating costs and expenses:
Salaries and benefits			4,547,532			46.6	%			4,156,614			46.7	%
Supplies			1,472,520			15.1	%			1,366,242			15.4	%
Other operating expenses			2,140,025			22.0	%			1,893,138			21.3	%
Electronic health records incentive reimbursement (f)			(73,592	)		-0.8	%			(40,227	)		-0.5	%
Rent			202,324			2.1	%			190,082			2.1	%
Depreciation and amortization			536,362			5.5	%			481,046			5.4	%
Total operating costs and expenses			8,825,171			90.5	%			8,046,895			90.4	%
Income from operations (d), (e), (f), (g), (h)			926,868			9.5	%			853,492			9.6	%
Interest expense, net			462,347			4.7	%			485,928			5.5	%
Loss from early extinguishment of debt			115,453			1.2	%			-			0.0	%
Equity in earnings of unconsolidated affiliates			(32,613	)		-0.3	%			(38,345	)		-0.4	%
Income from continuing operations before income taxes			381,681			3.9	%			405,909			4.5	%
Provision for income taxes			121,038			1.2	%			125,630			1.4	%
Income from continuing operations (d), (e), (f), (g), (h)			260,643			2.7	%			280,279			3.1	%
Discontinued operations, net of taxes:
Loss from operations of entities sold			(466	)		0.0	%			(4,546	)		-0.1	%
Impairment of hospitals sold			-			0.0	%			(47,930	)		-0.5	%
Loss on sale, net			-			0.0	%			(3,300	)		0.0	%
Loss from discontinued operations, net of taxes			(466	)		0.0	%			(55,776	)		-0.6	%
Net income			260,177			2.7	%			224,503			2.5	%
Less: Net income attributable to noncontrolling interests			57,111			0.6	%			53,486			0.6	%
Net income attributable to Community Health Systems, Inc. stockholders		$	203,066			2.1	%		$	171,017			1.9	%
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (d), (e), (f), (g), (h)		$	2.29						$	2.51
Discontinued operations			(0.01	)						(0.62	)
Net income		$	2.28						$	1.89
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (j):
Continuing operations (d), (e), (f), (g), (h)		$	2.27						$	2.49
Discontinued operations			(0.01	)						(0.61	)
Net income		$	2.27						$	1.87
Weighted-average number of shares outstanding (i):
Basic			89,028							90,514
Diluted			89,465							91,256
____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (in thousands) (Unaudited)
					Three Months Ended September 30,							Nine Months Ended September 30,
					2012			2011				2012			2011
Net income					$	58,758		$	92,631			$	260,177		$	224,503
Other comprehensive income (loss), net of income taxes:
	Net change in fair value of interest rate swaps					8,254			2,722				28,766			30,199
	Net change in fair value of available-for-sale securities					1,370			(4,029	)			3,509			(2,692	)
	Amortization and recognition of unrecognized pension cost components					1,202			790				3,483			2,369
		Other comprehensive income (loss)				10,826			(517	)			35,758			29,876
Comprehensive income						69,584			92,114				295,935			254,379
	Less: Comprehensive income attributable to noncontrolling interests					14,525			18,327				57,111			53,486
Comprehensive income attributable to Community Health Systems, Inc. stockholders					$	55,059		$	73,787			$	238,824		$	200,893
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Selected Operating Data (b) ($ In thousands) (Unaudited)
		For the Three Months Ended September 30,
		Consolidated											Same-Store
		2012				2011				% Change			2012				2011				% Change
Number of hospitals (at end of period)			135				130							130				130
Licensed beds (at end of period)			20,357				19,358							19,327				19,358
Beds in service (at end of period)			17,274				16,542							16,464				16,542
Admissions			173,108				164,842			5.0	%			164,336				164,842			-0.3	%
Adjusted admissions			355,672				334,644			6.3	%			337,252				334,644			0.8	%
Patient days			747,616				717,951							707,598				717,951
Average length of stay (days)			4.3				4.4							4.3				4.4
Occupancy rate (average beds in service)			47.1	%			47.1	%						46.7	%			47.1	%
Net operating revenues		$	3,212,030			$	2,945,477			9.0	%		$	3,063,944			$	2,946,032			4.0	%
Net inpatient revenues as a % of total net
operating revenues before provision for bad debts			43.6	%			44.5	%						43.4	%			44.5	%
Net outpatient revenues as a % of total net
operating revenues before provision for bad debts			54.6	%			53.9	%						54.8	%			53.9	%
Income from operations		$	287,628			$	283,803			1.3	%		$	297,361			$	293,049			1.5	%
Income from operations as a % of net operating revenues			9.0	%			9.6	%						9.7	%			9.9	%
Depreciation and amortization		$	182,207			$	161,515						$	175,921			$	161,515
Equity in earnings of unconsolidated affiliates		$	(7,419	)		$	(8,194	)					$	(7,491	)		$	(8,194	)
Liquidity Data:
Adjusted EBITDA (c)		$	477,254			$	453,512			5.2	%
Adjusted EBITDA as a % of net operating revenues			14.9	%			15.4	%
Net cash provided by operating activities		$	294,938			$	235,550
Net cash provided by operating activities as a % of net operating revenues			9.2	%			8.0	%
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Selected Operating Data (b) ($ In thousands) (Unaudited)
		For the Nine Months Ended September 30,
		Consolidated											Same-Store
		2012				2011				% Change			2012				2011				% Change
Number of hospitals (at end of period)			135				130							130				130
Licensed beds (at end of period)			20,357				19,358							19,327				19,358
Beds in service (at end of period)			17,274				16,542							16,464				16,542
Admissions			528,445				509,508			3.7	%			501,562				509,508			-1.6	%
Adjusted admissions			1,065,547				998,959			6.7	%			1,011,565				998,959			1.3	%
Patient days			2,302,714				2,237,614							2,172,575				2,237,614
Average length of stay (days)			4.4				4.4							4.3				4.4
Occupancy rate (average beds in service)			48.9	%			49.7	%						48.6	%			49.7	%
Net operating revenues		$	9,752,039			$	8,900,387			9.6	%		$	9,266,128			$	8,887,439			4.3	%
Net inpatient revenues as a % of total net
operating revenues before provision for bad debts			45.1	%			46.6	%						44.4	%			46.7	%
Net outpatient revenues as a % of total net operating revenues before provision for bad debts			53.1	%			51.4	%						53.8	%			51.4	%
Income from operations		$	926,868			$	853,492			8.6	%		$	896,540			$	875,652			2.4	%
Income from operations as a % of net operating revenues			9.5	%			9.6	%						9.7	%			9.9	%
Depreciation and amortization		$	536,362			$	481,046						$	518,057			$	481,046
Equity in earnings of unconsolidated affiliates		$	(32,613	)		$	(38,345	)					$	(32,791	)		$	(38,345	)
Liquidity Data:
Adjusted EBITDA (c)		$	1,495,843			$	1,372,883			9.0	%
Adjusted EBITDA as a % of net operating revenues			15.3	%			15.4	%
Net cash provided by operating activities		$	777,865			$	820,235
Net cash provided by operating activities as a % of net operating revenues			8.0	%			9.2	%
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except share data) (Unaudited)
			September 30,				December 31,
			2012				2011
ASSETS
Current assets
	Cash and cash equivalents		$	240,650			$	129,865
	Patient accounts receivable, net of allowance for doubtful accounts of $2,199,088 and $1,891,334 at September 30, 2012 and December 31, 2011, respectively			2,091,217				1,834,167
	Supplies			364,972				346,611
	Prepaid income taxes			20,233				101,389
	Deferred income taxes			89,797				89,797
	Prepaid expenses and taxes			132,807				112,613
	Other current assets			267,735				231,647
	Total current assets			3,207,411				2,846,089
Property and equipment				9,981,776				9,369,528
	Less accumulated depreciation and amortization			(2,875,982	)			(2,513,552	)
	Property and equipment, net			7,105,794				6,855,976
Goodwill				4,397,473				4,264,845
Other assets, net				1,530,477				1,241,930
Total assets			$	16,241,155			$	15,208,840
LIABILITIES AND EQUITY
Current liabilities
	Current maturities of long-term debt		$	99,194			$	63,706
	Accounts payable			809,255				748,997
	Accrued interest			110,864				110,121
	Accrued liabilities			961,910				988,315
	Total current liabilities			1,981,223				1,911,139
Long-term debt				9,472,869				8,782,798
Deferred income taxes				704,725				704,725
Other long-term liabilities				999,080				949,990
Total liabilities				13,157,897				12,348,652
Redeemable noncontrolling interests in equity of consolidated subsidiaries				370,514				395,743
EQUITY
Community Health Systems, Inc. stockholders' equity
	Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued			-				-
	Common stock, $.01 par value per share, 300,000,000 shares authorized; 92,161,852 shares issued and 91,186,303 shares outstanding at September 30, 2012 and 91,547,079 shares issued and 90,571,530 shares outstanding at December 31, 2011			922				915
	Additional paid-in capital			1,104,570				1,086,008
	Treasury stock, at cost, 975,549 shares at September 30, 2012 and December 31, 2011			(6,678	)			(6,678	)
	Accumulated other comprehensive loss			(148,721	)			(184,479	)
	Retained earnings			1,704,396				1,501,330
	Total Community Health Systems, Inc. stockholders' equity			2,654,489				2,397,096
Noncontrolling interests in equity of consolidated subsidiaries				58,255				67,349
Total equity				2,712,744				2,464,445
Total liabilities and equity			$	16,241,155			$	15,208,840
_____ For footnotes, see pages 12 and 13.

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited)
			Nine Months Ended
			September 30,
			2012				2011
Cash flows from operating activities
	Net income		$	260,177			$	224,503
	Adjustments to reconcile net income to net cash provided by operating activities:			536,362
	Depreciation and amortization							485,917
	Stock-based compensation expense			30,708				31,588
	Loss on sale, net			-				3,300
	Impairment of hospitals sold			-				47,930
	Loss from early extinguishment of debt			115,453				-
	Excess tax benefit relating to stock-based compensation			(1,545	)			(4,616	)
	Other non-cash expenses, net			22,482				14,279
	Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
	Patient accounts receivable			(227,814	)			(90,805	)
	Supplies, prepaid expenses and other current assets			(68,247	)			(31,455	)
	Accounts payable, accrued liabilities and income taxes			103,156				146,166
	Other			7,133				(6,572	)
	Net cash provided by operating activities			777,865				820,235
Cash flows from investing activities
	Acquisitions of facilities and other related equipment			(312,927	)			(209,451	)
	Purchases of property and equipment			(557,469	)			(532,845	)
	Proceeds from disposition of hospitals and other ancillary operations			-				172,578
	Proceeds from sale of property and equipment			4,808				9,251
	Increase in other investments			(222,164	)			(130,980	)
	Net cash used in investing activities			(1,087,752	)			(691,447	)
Cash flows from financing activities
	Proceeds from exercise of stock options			5,750				18,880
	Repurchase of restricted stock shares for payroll tax withholding requirements			(9,165	)			-
	Deferred financing costs			(135,647	)			(100	)
	Excess tax benefit relating to stock-based compensation			1,545				4,616
	Stock buy-back			-				(85,790	)
	Proceeds from noncontrolling investors in joint ventures			535				1,229
	Redemption of noncontrolling investments in joint ventures			(39,709	)			(4,784	)
	Distributions to noncontrolling investors in joint ventures			(60,676	)			(49,928	)
	Borrowings under credit agreements			5,924,377				83,000
	Issuance of long-term debt			3,825,000				-
	Proceeds from receivables facility			300,000				-
	Repayments of long-term indebtedness			(9,391,338	)			(128,768	)
	Net cash provided by (used in) financing activities			420,672				(161,645	)
Net change in cash and cash equivalents				110,785				(32,857	)
Cash and cash equivalents at beginning of period				129,865				299,169
Cash and cash equivalents at end of period			$	240,650			$	266,312
_____ For footnotes, see pages 12 and 13.

Footnotes to Financial Highlights, Financial Statements and Selected Operating Data

(a) The following table provides information needed to calculate income per share, which is adjusted for income attributable to noncontrolling interests (in thousands):

		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2012			2011				2012				2011
Income from continuing operations attributable to Community Health Systems, Inc. common stockholders:
Income from continuing operations, net of taxes		$	58,758		$	95,800			$	260,643			$	280,279
Less: Income from continuing operations attributable to noncontrolling interests, net of taxes			14,525			18,327				57,111				53,486
Income from continuing operations attributable to Community Health Systems, Inc. common stockholders - basic and diluted		$	44,233		$	77,473			$	203,532			$	226,793
Loss from discontinued operations attributable to Community Health Systems, Inc. common stockholders:
Loss from discontinued operations, net of taxes		$	-		$	(3,169	)		$	(466	)		$	(55,776	)
Less: Loss from discontinued operations attributable to noncontrolling interests, net of taxes			-			-				-				-
Loss from discontinued operations attributable to Community Health Systems, Inc. common stockholders - basic and diluted		$	-		$	(3,169	)		$	(466	)		$	(55,776	)

(b) Continuing operating results exclude discontinued operations for the three and nine months ended September 30, 2012 and 2011. Both financial and statistical results exclude entities in discontinued operations for all periods presented.

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