Community Health Systems, Inc. (CYH) has revised its 2026 adjusted EBITDA guidance to a midpoint of $1.338 billion, down from the initial midpoint of $1.415 billion. The adjustment comes amid challenges in the commercial elective segment and exchange-related headwinds. The company reported second-quarter EBITDA running about $60 million to $65 million below initial expectations.
The back half of 2026 is expected to face a $60 million to $70 million hit from commercial elective softness and exchange-related headwinds. However, these pressures are partly offset by about $50 million in benefits from state-directed payment programs in Georgia, Indiana, and Florida. Florida's program contributed $20 million to $25 million in the second quarter for program year 2025, with the midpoint of guidance assuming about half of that repeats for 2026. Out-of-period state-directed payment benefits for 2026 are expected to total about $15 million, including $17 million from Georgia and $20 million to $25 million from Florida.
Provider tax hits total about $24 million, including $9 million in Indiana and a $15 million Arizona state-directed payment take-back. Divestitures are expected to reduce EBITDA by $10 million to $12 million in 2026, including a $25 million loss tied to Clarksville and Pennsylvania hospitals owned for one month in the first quarter. Core EBITDA growth is expected to improve by about 1% from a year earlier, excluding one-time items and state-directed payment programs.
Community Health Systems reported last twelve months (LTM) EBITDA of $1.33 billion and total revenue of nearly $12 billion. The company's stock is trading at $2.95, down roughly 5.5% year-to-date, with a beta of 1.86. Market capitalization stands at $385 million, and total debt is approximately $10.2 billion, with second-lien debt outstanding at $2.4 billion and first-lien availability at just under $1.5 billion. The next debt maturity is in 2029, with about $1.2 billion maturing in each of 2029 and 2030. Levered free cash flow was negative $185 million over the last twelve months.
Same-store adjusted admissions rose 2.8% to 3.0% in the second quarter, with about 50% of that growth coming from self-pay or uninsured visits. Commercial elective procedures remained soft, while June was noted as the strongest surgical month of the quarter, returning to year-over-year growth. Exchange business exposure remains less than 4% of net revenue and adjusted admissions. Estimated accounts receivable (AR) buildup is $100 million to $150 million due to commercial payers taking longer to pay claims, with a state-directed working capital impact of about $200 million.
Operating expense per adjusted admission rose 0.3% in the second quarter on a same-store basis. Average salary rate growth was 1.1% in the quarter, below the full-year expectation of 3% to 4%. Contract labor fell 5.6% year-over-year on a same-store basis, standing at 1.1% of revenue. Medical specialist fees rose 19% in the second quarter and 14% year-to-date, exceeding the expected 5% to 8% range, driven largely by cash collection subsidies for anesthesia.
The company acquired or opened 4 ambulatory surgery centers (ASCs) in 2026, operating approximately 40 ASCs total. States have until October 31, 2026, to obligate funds from the Rural Health Transformation Fund and until September 2027 to spend them. Income from capital projects is expected to be recognized over 5 to 10 years.
The proposed 2027 Medicare outpatient rate increase is expected to be 5% to 5.5%.
