Community Health Systems Inc.

The stable outlook reflects our view that the company's downsizing has largely been completed and its focus will be to improve market position and shift to a growth strategy. We believe the company is now more stable and will perform at a level that will generate adequate free cash flow to meet all its obligations, exclusive of the amounts it needs to repay in 2021 and 2022 for Medicare advances and deferred payroll taxes. We could lower the rating if the company falters in its market strategy or if it experiences adverse regulatory or reimbursement developments that results in margin or cash flow degradation that we believe may become persistent. In our view, an incremental 300 to 350 basis points

...Community Health Systems Inc. has improved its hospital portfolio and debt profile. Community has spent the past several years turning around the company by downsizing and improving the quality of its hospital portfolio, reducing debt and leverage using several strategies including repurchasing debt, refinancing to lower interest expense, and revising its operating strategy to improve operating efficiency. Reported debt as of March 31, 2021, declined about $1.5 billion just since the end of 2019, and has been declining for several years. Adjusted leverage declined to about 6x as of March 31, 2021, from 9.3x as the end of 2019, and 10.8x at of the end of 2017. We expect the company will remain focused on its local market strategy. The company will continue to pursue strategies to improve patient volume trends and manage costs. Capital allocation will be targeted more toward expanding services within their markets and adding access points to keep patients within the system. We believe its...

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