July 30, 2007 at 16:07 PM EDT
Community Health Systems, Inc. Announces Second Quarter 2007 Results with Net Operating Revenues up 17.7%

Community Health Systems, Inc. (NYSE: CYH) today announced financial and operating results for the three and six months ended June 30, 2007.

Net operating revenues for the quarter ended June 30, 2007, totaled $1.249 billion, a 17.7% increase compared with $1.061 billion for the same period last year. Income from continuing operations and net income increased 2.7% to $53.8 million, or $0.57 per share (diluted), on 94.6 million weighted average shares outstanding for the quarter ended June 30, 2007, compared with $52.4 million, or $0.54 per share (diluted), on 96.9 million weighted average shares outstanding for the same period last year.

Adjusted EBITDA for the second quarter of 2007 was $172.5 million, compared with $156.7 million for the same period last year, representing a 10.1% increase. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations and minority interest in earnings. The Company uses adjusted EBITDA as a measure of liquidity. Net cash provided by operating activities for the second quarter of 2007 was $95.6 million, compared with $116.2 million for the same period last year.

The consolidated financial results for the quarter ended June 30, 2007, reflect a 10.9% increase in total admissions compared with the same period last year. This increase is attributable to hospitals acquired during 2007 and 2006. On a same-store basis, admissions decreased 0.2% and adjusted admissions decreased 0.4%, compared with the same period last year. On a same-store basis, net operating revenues increased 4.5%, compared with the same period last year.

Net operating revenues for the six months ended June 30, 2007, totaled $2.453 billion, a 17.5% increase compared with $2.088 billion for the same period last year. Income from continuing operations decreased 1.4% to $108.1 million compared with $109.6 million for the same period last year. As a result of a decrease in the number of weighted average shares outstanding on a per share (diluted) basis, income from continuing operations increased to $1.14 per share (diluted) on 94.4 million weighted average shares outstanding compared to $1.13 per share (diluted) on 97.5 million weighted average shares outstanding for the same period last year. Net income increased to $108.1 million, or $1.14 per share (diluted), for the six months ended June 30, 2007, compared with $106.4 million, or $1.09 per share (diluted), for the same period last year.

Adjusted EBITDA for the six months ended June 30, 2007, was $342.7 million, compared with $315.2 million for the same period last year, representing an 8.7% increase. Net cash provided by operating activities for the six months ended June 30, 2007, was $216.0 million, compared with $207.0 million for the same period last year.

The consolidated financial results for the six months ended June 30, 2007, reflect an 11.8% increase in total admissions compared with the same period last year. This increase is primarily attributable to hospitals acquired during 2007 and 2006. On a same-store basis, admissions increased 0.4% and adjusted admissions increased 0.4%, compared with the same period last year. On a same-store basis, net operating revenues increased 5.3%, compared with the same period last year.

Community Health Systems delivered a solid financial and operating performance for the second quarter of 2007, said Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems, Inc. These results reflect consistent execution of our centralized and standardized operating strategy and our ongoing focus on quality care. This strategy has enabled us to continue to be successful in meeting our objectives in a challenging, constantly evolving healthcare environment.

On July 25, 2007, the Company completed its acquisition of Triad Hospitals, Inc. (Triad) (former NYSE: TRI). Pursuant to the merger agreement under which the acquisition was completed, shareholders of Triad received $54 in cash per share of common stock, or approximately $6.968 billion in the aggregate, including the assumption of approximately $1.702 billion of existing indebtedness of Triad. Triad stock ceased to trade on the New York Stock Exchange effective at the close of business on July 25, 2007.

In connection with the consummation of the merger, the Company obtained $7.215 billion of senior secured financing under a new credit facility and its wholly-owned subsidiary, CHS/Community Health Systems, Inc. issued $3.021 billion aggregate principal amount ($3.000 billion, net of discount) of 8.875% senior notes due 2015 (the "Notes") at the closing of the merger. The Company used the net proceeds of $3.000 billion from the Notes offering and the net proceeds from the $6.065 billion of term loan under the new credit facility to pay the consideration under the merger agreement, to repay certain of its indebtedness and indebtedness of Triad, to complete certain related transactions, to pay certain costs and expenses of the transactions and for general corporate uses. A $750.0 million revolving credit facility and a $400.0 million delayed draw term loan facility is available to the Company for working capital and general corporate purposes under the new credit facility. The revolving credit facility will include a subfacility for letters of credit and a swingline subfacility.

We are very pleased to complete the acquisition of Triad Hospitals, Inc., added Smith. This transaction marks a significant milestone for the Company, establishing in our view Community Health Systems as the leading publicly traded hospital management company in the United States, with the expertise and scale inherent in this position. We believe this merger represents a significant growth opportunity as we begin to focus on the incremental value of the newly acquired assets. We are very excited about our ability to further expand our reach and geographic scope and look forward to the successful integration of the Triad operations.

Effective April 1, 2007, the Company completed the acquisition of Lincoln General Hospital, a 157 bed acute care hospital in Ruston, Louisiana. Ruston is approximately 70 miles east of Shreveport, Louisiana, and is home to both Louisiana Tech University and Grambling State University.

Effective May 1, 2007, the Company completed the acquisition of Porter Memorial Hospital, a 301 bed acute care hospital located in Valparaiso, Indiana. Hospital campuses are located in Valparaiso and Portage, Indiana, and outpatient medical campuses in Chesterton, Dermotte and Hebron, Indiana. Valparaiso is the county seat of Porter County, and is located 40 miles southeast of Chicago, Illinois, and 40 miles west of South Bend, Indiana.

Located in Franklin, Tennessee, Community Health Systems, Inc. is a leading operator of general acute care hospitals in non-urban and mid-market communities throughout the country. Through its subsidiaries, the Company currently owns, leases or operates 130 hospitals in 28 states. Its hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. 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 to discuss this press release on Tuesday, July 31, 2007, at 11:30 a.m. Central, 12:30 p.m. Eastern. 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 Companys 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 continue through August 31, 2007. A copy of the Companys Form 8-K (including this press release) and conference call slide show will also be available on the Companys website at www.chs.net.

Statements contained in this news release regarding expected operating results, acquisition transactions 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 Companys annual report on Form 10-K and, current reports on Form 8-K and 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.

Financial Highlights

(Unaudited)

(In thousands, except per share amounts)

Three Months EndedSix Months Ended
June 30,June 30,
2007200620072006
Net operating revenues $ 1,249,128 $ 1,061,054 $ 2,453,125 $ 2,087,616
Adjusted EBITDA (a) $ 172,549 (b) $ 156,744 $ 342,748 $ 315,202
Income from continuing operations $ 53,763 $ 52,369 $ 108,087 $ 109,623
Net income $ 53,763 $ 52,369 $ 108,087 $ 106,407
Income from continuing operations per share - basic
$ 0.57 $ 0.55 $ 1.16 $ 1.14
Income from continuing operations per share - diluted
$ 0.57 (b) $ 0.54 $ 1.14 $ 1.13
Net income per share - basic $ 0.57 $ 0.55 $ 1.16 $ 1.11
Net income per share - diluted $ 0.57 (b) $ 0.54 $ 1.14 $ 1.09
Weighted average number of shares

outstanding - basic

93,519 95,769 93,373 96,159
Weighted average number of shares

outstanding - diluted

94,648 96,870 94,422 97,537
Net cash provided by operating activities $ 95,641 $ 116,232 $ 215,988 $ 207,046

For footnotes, see page 11.

COMMUNITY HEALTH SYSTEMS, INC.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended
June 30,
20072006
Amount% of Net

Operating Revenue

Amount% of Net

Operating Revenue

Net operating revenues $ 1,249,128 100.0% $ 1,061,054 100.0%
Operating expenses:
Salaries and benefits 495,085 39.6% 420,147 39.6%
Provision for bad debts 148,661 11.9% 115,704 10.9%
Supplies 146,033 11.7% 125,700 11.8%
Other operating expenses 258,556 20.7% 219,113 20.7%
Rent 28,244 2.3% 23,646 2.2%
Depreciation and amortization 53,349 4.3% 47,183 4.5%
Minority interest in earnings 625 0.0% 455 0.0%
Total expenses 1,130,553 90.5% 951,948 89.7%
Income from operations 118,575 9.5% 109,106 10.3%
Interest expense, net 31,155 2.5% 23,870 2.3%
Income from continuing operations before income taxes
87,420 7.0% 85,236 8.0%
Provision for income taxes 33,657 2.7% 32,867 3.1%
Net income $ 53,763 4.3% $ 52,369 4.9%
Net income per share - basic $ 0.57 $ 0.55
Net income per share - diluted $ 0.57 $ 0.54
Weighted average number of shares
outstanding:
Basic 93,519 95,769
Diluted 94,648 96,870
Weighted average number of shares
outstanding - basic 93,519 95,769
Add effect of dilutive securities:
Stock awards 1,129 1,101
Weighted average number of shares
outstanding - diluted 94,648 96,870

COMMUNITY HEALTH SYSTEMS, INC.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

Six Months Ended
June 30,
20072006
Amount% of Net

Operating Revenue

Amount% of Net

Operating Revenue

Net operating revenues $ 2,453,125 100.0 % $ 2,087,616 100.0 %
Operating expenses:
Salaries and benefits 981,421 40.0 % 827,815 39.7 %
Provision for bad debts 284,360 11.6 % 223,295 10.7 %
Supplies 286,541 11.7 % 248,520 11.9 %
Other operating expenses 503,815 20.5 % 426,156 20.4 %
Rent 54,240 2.2 % 46,628 2.2 %
Depreciation and amortization 104,619 4.3 % 89,689 4.3 %
Minority interest in earnings 818 0.0 % 1,068 0.0 %
Total expenses 2,215,814 90.3 % 1,863,171 89.2 %
Income from operations 237,311 9.7 % 224,445 10.8 %
Interest expense, net 61,559 2.5 % 45,657 2.2 %
Income from continuing operations before income taxes
175,752 7.2 % 178,788 8.6 %
Provision for income taxes 67,665 2.8 % 69,165 3.3 %
Income from continuing operations 108,087 4.4 % 109,623 5.3 %
Discontinued operations, net of taxes:
Loss from operations - 0.0 % (657 ) -0.1 %
Loss on sale of hospitals - 0.0 % (2,559 ) -0.1 %
Loss on discontinued operations - 0.0 % (3,216 ) -0.2 %
Net income $ 108,087 4.4 % $ 106,407 5.1 %
Income from continuing operations per share-basic $ 1.16 $ 1.14
Income from continuing operations per share-diluted $ 1.14 $ 1.13
Net income per share - basic $ 1.16 $ 1.11
Net income per share - diluted $ 1.14 $ 1.09
Weighted average number of shares outstanding:
Basic 93,373 96,159
Diluted 94,422 97,537
Net Income per share calculation:
Net income $ 108,087 $ 106,407
Add - Convertible notes interest, net of taxes - 135
Adjusted net income $ 108,087 $ 106,542
Weighted average number of shares outstanding - basic
93,373 96,159
Add effect of dilutive securities:
Stock awards 1,049 1,085
Convertible notes - 293
Weighted average number of shares
outstanding - diluted 94,422 97,537

COMMUNITY HEALTH SYSTEMS, INC.

Selected Operating Data

(Unaudited)

($ in thousands)

For the Three Months Ended June 30,
ConsolidatedSame-Store
20072006% Change20072006% Change
Number of hospitals (at end of period) 79 74 73 73
Licensed beds (at end of period) 9,550 8,546 8,479 8,466
Beds in service (at end of period) 7,777 6,871 6,863 6,796
Admissions 86,739 78,248 10.9 % 77,300 77,425 -0.2 %
Adjusted admissions 163,882 147,223 11.3 % 145,359 145,920 -0.4 %
Patient days 353,474 321,573 9.9 % 314,721 319,014 -1.3 %
Average length of stay (days) 4.1 4.1 4.1 4.1
Occupancy rate (average beds in service) 50.9 % 52.5 % 51.6 % 52.6 %
Net operating revenues $ 1,249,128 $ 1,061,054 17.7 % $ 1,102,325 $ 1,054,956 4.5 %
Net inpatient revenue as a % of total net operating revenues
48.1 % 49.8 % 48.2 % 49.8 %
Net outpatient revenue as a % of total net operating revenues
50.6 % 48.9 % 50.5 % 48.9 %
Income from operations $ 118,575 $ 109,106 8.7 % $ 110,925 $ 110,121 0.7 %
Income from operations as a % of net operating revenues
9.5 % 10.3 % 10.1 % 10.4 %
Depreciation and amortization $ 53,349 $ 47,183 $ 47,903 $ 46,822
Minority interest in earnings $ 625 $ 455 $ 625 $ 455
Liquidity Data:
Adjusted EBITDA $ 172,549 $ 156,744 10.1 %
Adjusted EBITDA as a % of net operating revenues
13.8 % 14.8 %
Net cash provided by operating activities $ 95,641 $ 116,232

Net cash provided by operating activities as a % of net operating revenue

7.7 % 11.0 %

COMMUNITY HEALTH SYSTEMS, INC.

Selected Operating Data

(Unaudited)

($ in thousands)

For the Six Months Ended June 30,
ConsolidatedSame-Store
20072006% Change20072006% Change
Number of hospitals (at end of period) 79 74 73 73
Licensed beds (at end of period) 9,550 8,546 8,479 8,466
Beds in service (at end of period) 7,777 6,871 6,863 6,796
Admissions 175,763 157,214 11.8 % 156,330 155,696 0.4 %
Adjusted admissions 326,960 290,305 12.6 % 289,197 288,022 0.4 %
Patient days 717,654 654,822 9.6 % 641,224 649,396 -1.3 %
Average length of stay (days) 4.1 4.2 4.1 4.2
Occupancy rate (average beds in service) 52.8 % 54.5 % 53.5 % 54.7 %
Net operating revenues $ 2,453,125 $ 2,087,616 17.5 % $ 2,182,151 $ 2,072,549 5.3 %
Net inpatient revenue as a % of total net operating revenues
49.2 % 50.3 % 49.3 % 50.3 %
Net outpatient revenue as a % of total net operating revenues
49.6 % 48.4 % 49.5 % 48.4 %
Income from operations $ 237,311 $ 224,445 5.7 % $ 225,635 $ 225,266 0.2 %
Income from operations as a % of net operating revenues
9.7 % 10.8 % 10.3 % 10.9 %
Depreciation and amortization $ 104,619 $ 89,689 $ 93,686 $ 88,961
Minority interest in earnings $ 818 $ 1,068 $ 818 $ 1,068
Liquidity Data:
Adjusted EBITDA $ 342,748 $ 315,202 8.7 %
Adjusted EBITDA as a % of net operating revenues
14.0 % 15.1 %
Net cash provided by operating activities $ 215,988 $ 207,046

Net cash provided by operating activities as a % of net operating revenue

8.8 % 9.9 %

Continuing operating results and statistical data exclude discontinued operations for all periods presented.

COMMUNITY HEALTH SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

($ in thousands)

June 30,

Dec. 31,

20072006
ASSETS
Current assets
Cash and cash equivalents $ 21,357 $ 40,566
Patient accounts receivable, net of allowance for doubtful accounts of $498,473 and $478,565 at June 30, 2007 and December 31, 2006, respectively
876,523 773,984
Supplies 121,964 113,320
Deferred income taxes 13,249 13,249
Prepaid expenses and taxes 36,287 32,385
Other current assets 62,933 47,880
Total current assets 1,132,313 1,021,384
Property and equipment 2,809,988 2,630,366
Less accumulated depreciation and amortization (720,846 ) (643,789 )
Property and equipment, net 2,089,142 1,986,577
Goodwill 1,344,956 1,336,525
Other assets, net 226,700 162,093
Total assets $ 4,793,111 $ 4,506,579
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 25,757 $ 35,396
Accounts payable 257,730 247,747
Current income taxes payable 49,010 7,626
Accrued interest 8,375 7,122
Accrued liabilities 270,152 277,392
Total current liabilities 611,024 575,283
Long-term debt 1,974,240 1,905,781
Deferred income taxes 141,472 141,472
Other long-term liabilities 205,408 160,370
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; 95,881,020 shares issued and 94,905,471 shares outstanding at June 30, 2007 and 95,026,494 shares issued and 94,050,945 shares outstanding at December 31, 2006
959 950
Additional paid-in capital 1,215,321 1,195,947
Treasury stock, at cost, 975,549 shares at June 30, 2007 and December 31, 2006
(6,678 ) (6,678 )
Accumulated other comprehensive income 15,622 5,798
Retained earnings 635,743 527,656
Total stockholders' equity 1,860,967 1,723,673
Total liabilities and stockholders' equity $ 4,793,111 $ 4,506,579

COMMUNITY HEALTH SYSTEMS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Six Months Ended
June 30,
20072006
Cash flows from operating activities
Net income $ 108,087 $ 106,407
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 104,619 89,689
Minority interest in earnings 818 1,068
Stock-based compensation expense 14,295 8,946
Excess tax benefits relating to stock-based compensation (2,295 ) (4,588 )
Other non-cash expenses, net (1,542 ) 3,306
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Patient accounts receivable (47,415 ) (57,961 )
Supplies, prepaid expenses and other current assets (13,458 ) (93 )
Accounts payable, accrued liabilities and income taxes 46,353 69,988
Other 6,526 (9,716 )
Net cash provided by operating activities 215,988 207,046
Cash flows from investing activities
Acquisitions of facilities and other related equipment (187,955 ) (178,015 )
Purchases of property and equipment (108,849 ) (94,194 )
Disposition of hospital and other ancillary operations 12,662 750
Proceeds from sale of equipment 234 74
Increase in other assets (25,362 ) (24,382 )
Net cash used in investing activities (309,270 ) (295,767 )
Cash flows from financing activities
Proceeds from exercise of stock options 6,693 8,699
Excess tax benefits relating to stock-based compensation 2,295 4,588
Stock buy-back - (137,666 )
Deferred financing costs (367 ) (16 )
Redemption of convertible notes - (128 )
Proceeds from minority investors in joint ventures 1,105 3,060
Redemption of minority investments in joint ventures (1,369 ) (530 )
Distributions to minority investors in joint ventures (1,705 ) (1,977 )
Borrowings under credit agreement 132,000 176,000
Repayments of long-term indebtedness (64,579 ) (43,260 )
Net cash provided by financing activities 74,073 8,770
Net change in cash and cash equivalents (19,209 ) (79,951 )
Cash and cash equivalents at beginning of period 40,566 104,108
Cash and cash equivalents at end of period $ 21,357 $ 24,157

Footnotes for Page 4

(a) EBITDA consists of income before interest, income taxes, and depreciation and amortization.  Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations and minority interest in earnings.  The Company has from time to time sold minority interests in certain of its subsidiaries or acquired subsidiaries with existing minority interest ownership positions.  The Company believes that it is useful to present adjusted EBITDA because it excludes the portion of EBITDA attributable to these third party interests and clarifies for investors the Companys portion of EBITDA generated by continuing operations.  The Company uses adjusted EBITDA as a measure of liquidity.  The Company has included this measure because it believes it provides investors with additional information about the Companys ability to incur and service debt and make capital expenditures.  Adjusted EBITDA is the basis for a key component in the determination of the Companys compliance with some of the covenants under the Companys senior secured credit facility, as well as to determine the interest rate and commitment fee payable under the senior secured credit facility.

Adjusted EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles.  It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles.  The items excluded from adjusted EBITDA are significant components in understanding and evaluating financial performance and liquidity.  This calculation of adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles adjusted EBITDA, as defined, to net cash provided by operating activities as derived directly from the consolidated financial statements for the three months and six months ended June 30, 2007 and 2006 (in thousands):

Three Months EndedSix Months Ended
June 30,June 30,
2007200620072006
Adjusted EBITDA $ 172,549 $ 156,744 $ 342,748 $ 315,202
Interest expense, net (31,155 ) (23,870 ) (61,559 ) (45,657 )
Provision for income taxes (33,657 ) (32,867 ) (67,665 ) (69,165 )

Loss from operations of hospital sold, net of taxes

- - - (657 )
Other non-cash expenses, net 4,755 5,026 10,459 3,727
Net changes in operating assets and liabilities, net of effects of acquisitions
(16,851 ) 11,199 (7,995 ) 3,596
Net cash provided by operating activities $ 95,641 $ 116,232 $ 215,988 $ 207,046

(b) Includes additional stock-based compensation expense of approximately $2.7 million, or $0.01 per diluted share and $5.3 million, or $0.03 per diluted share for the three months and six months ended June 30, 2007, respectively, representing an additional incremental year of stock-based compensation expense as no restricted stock or options were granted in 2004.

Contacts:

Community Health Systems, Inc.
Investor Contact:
W. Larry Cash
Executive Vice President and Chief Financial Officer
615-465-7000
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