Community Health Systems Inc.'s operating performance has been steadily improving, given growing patient volumes and more favorable procedure mix, better utilization of contract labor, and moderating inflationary pressures, leading to increasing adjusted EBITDA margins and cash flow generation. However, adjusted leverage remains stubbornly high, remaining more than 8x, and the company has yet to generate strong sustained positive free cash flows. We raised our rating on Community Health to 'CCC+' from 'SD' (selective default). At the same time, we also raised our ratings on the senior unsecured notes to 'CCC-' from 'D'. The outlook is negative, reflecting the risk of further distressed exchanges in the intermediate future despite credit metrics potentially improving in 2024. The negative outlook reflects the potential
