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Long-Term Debt | 9 Months Ended
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Sep. 30, 2024
Long-Term Debt and Lease Obligation [Abstract] |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt, net of unamortized debt issuance costs and discounts or premiums, as applicable, consists of the following (in millions):
|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
8% Senior Secured Notes due 2026 |  | $ | — |  |  | $ | 1,116 |
8% Senior Secured Notes due 2027 |  |  | 700 |  |  |  | 700 |
5⅝% Senior Secured Notes due 2027 |  |  | 1,757 |  |  |  | 1,900 |
6⅞% Senior Notes due 2028 |  |  | 626 |  |  |  | 756 |
6% Senior Secured Notes due 2029 |  |  | 644 |  |  |  | 644 |
5¼% Senior Secured Notes due 2030 |  |  | 1,535 |  |  |  | 1,535 |
4¾% Senior Secured Notes due 2031 |  |  | 1,058 |  |  |  | 1,058 |
10⅞% Senior Secured Notes due 2032 |  |  | 2,225 |  |  |  | 1,000 |
6⅞% Junior-Priority Secured Notes due 2029 |  |  | 1,244 |  |  |  | 1,244 |
6⅛% Junior-Priority Secured Notes due 2030 |  |  | 1,227 |  |  |  | 1,227 |
ABL Facility |  |  | 372 |  |  |  | 247 |
Finance lease and financing obligations |  |  | 358 |  |  |  | 366 |
Other |  |  | 25 |  |  |  | 32 |
Less: Unamortized deferred debt issuance costs |  |  | (284 | ) |  |  | (338 | )
Total debt |  |  | 11,487 |  |  |  | 11,487 |
Less: Current maturities |  |  | (20 | ) |  |  | (21 | )
Total long-term debt |  | $ | 11,467 |  |  | $ | 11,466 |
On June 5, 2024, CHS/Community Health Systems, Inc. (“CHS”) completed the offering of an additional $1.225 billion aggregate principal amount of its outstanding 10.875% Senior Secured Notes due 2032 (the “Tack-On Notes”) at an issue price of 102.000%, plus accrued and unpaid interest from December 22, 2023 to the closing date (which equaled approximately $60 million). The Tack-On Notes are part of the same series as, and rank equally with, the 10⅞% Senior Secured Notes due 2032 issued in December 2023. Following the issuance of the Tack-On Notes, the total aggregate principal amount of outstanding 10⅞% Senior Secured Notes due 2032 is $2.225 billion. Proceeds from the offering of the Tack-On Notes, together with cash on hand, were used to redeem all $1.116 billion of the outstanding 8.000% Senior Secured Notes due 2026, to fund repurchases of the Company’s 6⅞% Senior Notes due 2028 as noted below, to pay related fees and expenses and for general corporate purposes. The 10⅞% Senior Secured Notes due 2032 bear interest at a rate of 10.875% per year payable semi-annually in arrears on February 15 and August 15, which payments commenced on August 15, 2024. The 10⅞% Senior Secured Notes due 2032 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. The 10⅞% Senior Secured Notes due 2032 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 10⅞% Senior Secured Notes due 2032. Approximately $98 million of the proceeds from the Tack-On Notes, as described above, was used to extinguish $130 million principal value of the Company’s 6⅞% Senior Notes due 2028, resulting in a pre-tax gain from early extinguishment of debt of approximately $32 million. Together with the issuance of the Tack-On Notes, a pre-tax and after-tax gain from early extinguishment of debt of $26 million and $27 million, respectively, for the nine months ended September 30, 2024, resulted from these transactions. There were no financing transactions in the comparable prior year periods. On June 5, 2024, the Company and CHS entered into the Second Amendment and Restatement Agreement (the “Amendment”) to refinance and replace the amended and restated asset-based loan (“ABL”) credit agreement (the “ABL Credit Agreement” and, as amended by the Amendment, the “Amended and Restated ABL Credit Agreement”), dated as of November 22, 2021, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other agents party thereto. Pursuant to the Amended and Restated ABL Credit Agreement, the lenders have extended to CHS a revolving asset-based loan facility (the “ABL Facility”) in the maximum aggregate principal amount of $1.0 billion, subject to borrowing base capacity. The ABL Facility includes borrowing capacity available for letters of credit of $200 million. CHS and all domestic subsidiaries of CHS that guarantee CHS’ other outstanding senior and senior secured indebtedness guarantee the obligations of CHS under the ABL Facility. Subject to certain exceptions, all obligations under the ABL Facility and the related guarantees are secured by a perfected first-priority security interest in substantially all of the receivables, deposit, collection and other accounts and contract rights, books, records and other instruments related to the foregoing of the Company, CHS and the guarantors, as well as a perfected junior-priority third lien security interest in substantially all of the other assets of the Company, CHS and the guarantors, subject to customary exceptions and intercreditor arrangements. Principal amounts outstanding under the ABL Facility will be due and payable in full on June 5, 2029. During the three months ended September 30, 2024, the Company extinguished approximately $143 million principal value of the 5⅝% Senior Secured Notes due 2027 through open market repurchases utilizing cash on hand. An immaterial pre-tax and after-tax loss from early extinguishment of debt resulted from these repurchases. At September 30, 2024, the Company had outstanding borrowings of $372 million and approximately $438 million of additional borrowing capacity (after taking into consideration the $66 million of outstanding letters of credit) under the ABL Facility. The issued letters of credit were primarily in support of potential insurance-related claims and certain bonds. Letters of credit were reduced during the nine months ended September 30, 2024 by $15 million, primarily in relation to a professional liability claim that was settled and funded during the nine months ended September 30, 2024. The ABL Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) engage in mergers, acquisitions and asset sales, (7) conduct transactions with affiliates, (8) alter the nature of the Company’s, CHS’ or the guarantors’ businesses, (9) grant certain guarantees with respect to physician practices, (10) engage in sale and leaseback transactions or (11) change the Company’s fiscal year. The Company is also required to comply with a consolidated fixed coverage ratio, upon certain triggering events described below, and various affirmative covenants. The consolidated fixed charge coverage ratio is calculated as the ratio of (x) consolidated EBITDA (as defined in the ABL Facility) less capital expenditures to (y) the sum of consolidated interest expense (as defined in the ABL Facility), scheduled principal payments, income taxes and restricted payments made in cash or in permitted investments. For purposes of calculating the consolidated fixed charge coverage ratio, the calculation of consolidated EBITDA as defined in the ABL Facility is a trailing 12-month calculation that begins with the Company’s consolidated net income, with certain adjustments for interest, taxes, depreciation and amortization, net income attributable to noncontrolling interests, stock compensation expense, restructuring costs, and the financial impact of other non-cash or non-recurring items recorded during any such 12-month period. The consolidated fixed charge coverage ratio is a required covenant only in periods where the total borrowings outstanding under the ABL Facility reduce the amount available in the facility to less than the greater of (i) $95 million or (ii) 10% of the calculated borrowing base. As a result, in the event the Company has less than $95 million available under the ABL Facility, the Company would need to comply with the consolidated fixed charge coverage ratio. At September 30, 2024, the Company is not subject to the consolidated fixed charge coverage ratio as such triggering event had not occurred during the twelve months ended September 30, 2024. The Company paid interest of $202 million and $198 million on borrowings during the three months ended September 30, 2024 and 2023, respectively, and $562 million and $583 million on borrowings during the nine months ended September 30, 2024 and 2023, respectively.

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