Hey everyone, thank you for joining us today. My name is Ben Hendrix. I'm the healthcare services and managed care analyst at RBC, and I'm very pleased today to host Kevin Hammons, Chief Executive Officer, and Jason, your Chief Financial Officer at Community Health Systems. Thank you guys very much for joining us today. Thank you. Yeah, thank you, Ben. Yeah. Maybe you guys can start off a little bit. I hear there's a little bit of news coming out of your Indiana market impacting that area. If you could just give us an update on what's happening, your overall views there, it'd be great. Yeah, I'll start there. We're hearing that the Indiana DPP has been approved by CMS. It's not posted on CMS's website, or at least it wasn't as of yesterday. We're hearing news from the state and from the governor, so we don't have the details yet. We're not sure which period. It relates to, or we're not sure how much the impact will be, but it'll be beneficial. That's great. How do we think about, I know you guys haven't given a lot of hard numbers here, but how do we think about how DPP, how in Indiana specifically, has played into your forecasting? It is not currently in the forecast. Presumably, if we can get the information, we'll have some recognition in the Q2. Again, we don't yet know the amount or the period that was actually approved. Great. Just wanted to go on to talk about volumes and admissions in the quarter, and how you've been progressing. Same-store adjusted admissions were down about 0.5% in the quarter, inpatient admissions down 1.3%, and then a little bit of weakness in surgeries and ED visits. You've indicated that you're still expecting low single-digit volume growth for the year. What are the indicators that are giving confidence in that H2 recovery, and at what point in the year do you expect to see that inflection? Sure. I'll take this one. As we had indicated when we gave our guidance back in February, we expected the H2 of the year to be stronger. We're seeing more seasonality in the year with people deferring business early in the year with high co-pays and deductibles, particularly in an environment like we have today with higher inflation. Cost of groceries had not come down as people had expected. Now the price of gas at the pump is going up, and there's the conflict in Iran, so disruption. People, I think, are being a little more cautious. What we saw in the Q1 was the softness in volume, but even beyond that, it was a softness in commercial insurance, primarily. Which means it's those who have higher co-pays and deductibles were the ones staying away. We do expect that, as we've seen in years past, and last year in particular, a recovery in the back half of the year. As people meet those deductibles at some point, either through an emergency room visit, other healthcare services, other family members, and they meet their family deductible, then they'll start to come back in for services in the H2 of the year. One kind of data point that we watch pretty closely and gives us some comfort that this is exactly what's happening is we're looking at imaging tests and diagnostic testing, because those are all precursors to those surgeries. Our diagnostic testing, our imaging, in the Q1, was up over 2025. We're performing more of those diagnostic tests, more of the imaging tests. Those, ultimately, there's a conversion kind of factor. Our expectation, we believe those will convert to the downstream admissions and surgeries and so forth, as those services are performed. How do we think about the conversion factor and the lag time when you do see a pickup in imaging? Yeah. That lag time is, and we've gone back and studied the last couple of years, the lag time's longer in the first part of the year and shrinks throughout the year. It's still too early to tell. We know that we're performing those imaging tests. Typically, people don't have an MRI unless they're going to need a surgery. That's where we expect those will ultimately. It depends in terms of the actual conversion factor. Depends on what type of imaging or what type of scan, diagnostic test. Different things have different conversion factors. As I think about our surgeries, the biggest decline in Q1 in surgeries, almost 60% of the decline was in orthopedic surgeries, the easiest thing to defer. People will put up with a sore knee or hip or shoulder. They're typically not emergent type surgeries. With that, we've performed the MRIs at a rate above last year. We would expect those surgeries to ultimately come back. The payer mix, obviously meaningful headwind in Q1 2026, you've already mentioned the consumer confidence. Maybe that's impacting more the commercial volume, but it sounds like maybe some of these imagings being ortho might be a good indication of the ramp in the back half. For that. I would assume this is incrementally more confident on the commercial side, but maybe. Yes, certainly the majority of the declines were on the commercial side. Leading us, again, to kind of supporting our position that it's more of an economic decision. We think that business comes back Maybe we can switch over to labor side. Average hourly wages grew about 2.3% in the quarter, notable deceleration from growth seen in last year's quarter, and contract labor was down 11%. Do you think you've now reached a sustainable run rate on both wage inflation and contract labor? How should we think about labor costs as a percentage of revenue for the full year? Yeah, I do think we've kind of leveled off. The contract labor came in at about 1.1% of revenue in the Q1. Our guide assumes 1.3%-1.5%, so just under that low end for the average hourly rate. You mentioned 2.3%. Our annual guide assumes 3%-4%. I still think our annual guide holds for both contract labor and salaries, wages, and benefits. Three, four is still a little bit, 100 basis points higher than long term pre-COVID, and so we'll probably get back there? Yeah, I think so. As we expect these volumes to come back in, we'll have a little bit of premium pay, et cetera, that'll make that up a little bit. You added 30 net physicians in Q1 2026 and noted a decline in overall physician turnover, and that creates a near term cost headwind of about $5 million. How would we think about the revenue ramp timeline for the newly recruited physicians, and what does your pipeline look like for the remainder of the year? The pipeline looks good for the remainder of the year. We're really working and kind of launched at the beginning of this year, some new top priorities for the company, one of those being quality of care, but another one being physician experience. Really focusing on our physician experience, reducing physician turnover. There's a big cost to recruit a physician and get them ramped up. Limiting physician turnover is something certainly that's high on our radar. As our quality improves, we believe we'll be able to recruit higher quality physicians and maintain those that are already on staff. I think maybe there's another part of your question there. Oh, yeah, I wanted to also transition into professional fees as well. Yeah. Yes. Obviously, you guys have made some strides in transitioning a lot of that internal. I just want to kind of get your overall thoughts, and we've also seen professional fees accelerate a little bit amongst some of your peers. Just want to get idea of trends and strategy there and kind of what you're seeing. Professional fees were up 11% year-over-year same store basis this quarter. Our guide assumed 5%-8%. These professional fees, it was particularly anesthesia and radiology, which has continued to be where we've had headwinds. Those contracts have an income guarantee stipend associated with them, so when they have lower revenues, then we have to pay a stipend. I think that's what was driving the increase in the Q1 above our guide. Again, I think it'll get back down to that 5%-8%, probably 8%, for the full year by the time the volume comes back. In terms of the strategies, where there's opportunities to insource, we will do that. We did insource anesthesia in one hospital in November 2025. We're always mindful where that makes sense, and each market can be different in terms of what the opportunities there are within that market, the rates that they receive versus we would receive if we were to employ. Maybe we can just a little bit of a recap on the professional fee categories. I know you mentioned anesthesia and radiology are pressure points. It sounds like we don't talk as much about hospitalists anymore. Just wondering kind of what it is, A, about hospitalists that makes that easier to staff? When we think about radiology as something we think could be done remotely and maybe surprised that we still see a little bit of a headwind there. Maybe you can kind of talk about those dynamics? Sure. Let me jump in on some of this, and please, if I miss something, Jason. On hospitalists, we're probably about 80% insourced now in hospitalists. That was a big pain point a few years ago, along with our emergency room doctors. In those markets where we've had the ability to insource those, hire those doctors, we have found that to be very beneficial and a good way to run. We have a few markets left that they're still outsourced, but we have good contracts in those markets. There hasn't been a real need to insource, but that's why we don't hear a lot of noise around that any longer. That's pretty well insourced. Got you. I want to move over to the managed care backdrop. You've cited increasingly aggressive managed care behavior, particularly around pre-authorizations and denials, yeah, as a contributor to volume softness, especially in one quarter. What specific actions have you taken to push back on those practices, and are you seeing any early signs of improvement? I wouldn't say necessarily improvement. Yeah. We are taking steps. We have a physician advisor group. We stood this up really starting two years ago. We've continued to ramp that up. They cover all of our hospitals now, where our physician advisor group, our employed physicians or specialists who get involved whenever there's a denial of a pre-authorization claim. They have a short window where they can do a peer-to-peer review with the payer. We have a success rate of over 50%. Of those. They are continuing to get busier. We know the behavior from the payers are continuing to ramp up some of those denials of pre-authorization claims. We're winning at over 50% success rate of getting those overturned. Any development in terms of AI or other initiatives that are helping you with that, or is that increasing the arms race with payers, or is it reducing friction? How should we think about that? There is. We're using AI. AI helps us review the patient records. We're doing appeal letters. There's denials of pre-authorization. There's also denials post-services being performed. We have some AI tools that help us appeal those and so forth as well. Yeah, it's a little bit of an arms race right now. The other piece I'd point out related to pre-authorization denials is, and we're hearing this more anecdotally, but most of our physicians that practice at our hospitals are independent physicians. If they're submitting for a test or a procedure and there's a pre-authorization denial at that level, that patient never gets to the hospital. We don't have a mechanism to kind of get involved in that. We're hearing that the independent physicians in our markets are also getting backed up, either delays on pre-authorization, some case it's not an outright denial, but just a delay, and in other cases, it's a denial. Are there opportunities- That's slowing down the patients actually getting into the hospital to have a procedure performed. Are there opportunities to leverage your internal capabilities to help those physicians with the pre-auth? There's some restrictions to be able to do that for independent physicians as a referral source. We're limited in our ability to help out in that context. Got you. Jumping around a little bit, I know we started off right off the bat with the Indiana news, but I wanted to talk a little bit about the state programs and kind of contributions that we are seeing. Georgia State-directed program, I think $20 million, $30 million revenue, and $25 million EBITDA in the quarter, 2/3 of that was retroactive to July 2025. What's the normalized quarterly run rate from Georgia going forward, and how many additional state-directed programs other than Indiana are we currently pending? Yeah. Georgia, which you mentioned, was approved in the first quarter. That's about $10 million of revenue, $8 million or $9 million of EBITDA per quarter. We mentioned Indiana, that was just apparently has recently approved, waiting on final validation. Florida DPP was the third state that we had mentioned that had been submitted, and it was approved in April. That one, we are also waiting on the actual final waiver and tax information to determine how much. It was for the period October 2024 through September of 2025. Whatever the incremental impact there is, it'll be fully recognized, presumably in the Q2 that we're pushing for. A lot of anticipation around that one. Any thoughts on kind of the hold-up, why it's taking this long? Is it just size or? Just I think all of these have taken a little longer to get through CMS's review. I think there were some tweaks from the preprint that was submitted and the final approved version. That's kind of the data that we need to work through to figure out what the final impact's going to be. Continuing on the policy and reimbursement side, I know you guys have been actively engaged with policymakers on the Rural Health Transformation Fund. Can you help us size the potential revenue opportunity for the program for Community specifically? What's your current visibility into timing and allocation, and maybe even give us some notes on kind of the mechanical process behind all of that if it's known. Yeah. Sorry to not be able to provide too much information. Thank you. Let me tell you what we do know. Our 12 remaining states, that's excluding Arkansas, which the divestiture closes this quarter, were allocated about $2.6 billion in the aggregate of Year 1 Funds. The states have until October 30th to obligate those funds. They have until September of 2027 to actually spend those Year 1 Funds. Each of the states are in various stages of the application process. Most of them are starting to explain how the process will work. The applications themselves haven't yet opened up. We're monitoring each of our states' activities daily. There are some where we've indicated, it's an application, sometimes it's called an indication of interest, just says that, "Hey, I'm here and I've got some ideas." We ultimately probably won't know until later into the third quarter, potentially even in October, what the full amounts that we will be awarded or the timing of receipt of that cash. Got you. Thanks for that. I want to move over to divestitures and capital allocation. You completed Clarksville, Pennsylvania, and Huntsville divestitures. Pending Arkansas still. Just wanted to think about at what leverage level do you guys feel comfortable pivoting to more meaningfully from debt reduction to growth investment? How are you balancing that? I think we're getting really close to that. Our leverage has consistently come down over the past couple of years. We're really comfortable with our portfolio of hospitals right now. We do have one additional divestiture that's in flight. We have an offer on the table, the buyer's doing some due diligence. I'd probably put the odds at about 50/50 right now that that deal gets across the finish line. We would certainly like to do that and think we can get it across the finish line later this year. Beyond that, I would say we're more likely than not to really slow down the divestitures and start that pivot. You saw that we acquired a large surgery center this quarter. We'll close on it later this quarter. It's our largest acquisition in 10 years, a decade. So since 2016. It's the largest multi-specialty surgery center in the state of Alabama. It will fit with our Birmingham market. We also bought a smaller surgery center in Anchorage, Alaska this quarter as well. Starting to make that pivot, as well as we've been investing in some growth opportunities and outpatient access points, expanding some of our inpatient through just normal capital spending as well. I think we'll have an opportunity as our cash flow begins to improve, our leverage continues to come down, to be a little more aggressive on the growth front as well. How do you guys think about ambulatory or outpatient access facilities per hospital or hospital market? I know some of your competitors have thrown out some targets in terms of where they are now, where they want to be to get to a certain market share in their markets. I wanted to see if you guys have any kind of rough estimates of how development might be on a per market basis towards your ambulatory and outpatient. Our markets differ from one another pretty greatly, so we don't have any set targets. We kind of take it on a market-by-market basis. I'd also maybe just point out with the smaller markets, maybe as compared to an urban market, one of the differences is there may be only one primary orthopedic group or cardiac group in our markets, and we wouldn't develop an ASC necessarily to compete with them. We would invest maybe some extra time to get aligned with them before we do an ASC strategy around that type of service line. I think that differs from a larger urban area where you have multiple choices or could even build your own to compete with others in the market. Our markets, there's usually just not enough total business in a specialty like that to do it. We're a little more selective on how we go about building those out, but certainly pursuing those outpatient strategies and service lines and ASCs and so forth in all of our markets. We're covered right now, probably 85% of our markets have ASCs. Staying on that line of questioning, I know you've got some de novos in Birmingham and Foley, Alabama. Maybe we can talk about how those ramp versus some of the acquisition you did more broadly in Alabama. What are the puts and takes of how they consume cash and the ramp-up, and when would they be fully functional? Yeah. There's probably an 18-month window to ramp those up. A little quicker than an acute care hospital. Even a physician practice typically takes 18- 24 months to get fully ramped. These ASCs are, even though they're de novo ASCs, they're with existing physicians who are in the market, who have market share, they'll ramp a little bit quicker. Jason, maybe you can give us a little bit of a overview or a recap on cash flow and expectations. I think operating cash flow was a $297 million deficit in Q1, versus $120 million in positive in the prior year. I know there were some one-time items, $90 million in Medicaid's supplement, and provider timing or provider tax timing, $50 million, $60 million of A/R buildup. What are some of the other items there and how do we think about cash flow through the rest of the year? Yeah. Our guidance was $600 million-$700 million positive for the full year. You mentioned some of those larger items. There's a few other, A/P is $25 million-$50 million just on timing there, we think will flip by the time we get to the end of the year. Ultimately, it's back to the generation of EBITDA and kind of getting back on track with the payer mix improving and volumes returning. Gotcha. I wanted to talk a little bit about your technology and development. We've already talked about a little bit on the AI side in terms of your relationship with payers, but you've mentioned deployment of ambient listening technology in clinics and hospitals to reduce the administrative burden. That's a common theme we've heard. How broadly is that currently deployed, and has the early physician feedback been good, bad, neutral, and different? What do we think about that? Yeah. The early feedback's been fantastic. It's a real game changer for the physicians. We are rolling it out to all of our hospitalists, all of our EDs, and all of our clinics. We will be complete with that rollout by the end of the Q2. We'll have it throughout the entire enterprise. I think, again, it's gone over really well. The physicians are saying it saves them a lot of time, not only with the patient, but also then they're not having to document in the evenings. The quality of the patient record is better as well, and we think that'll have some downstream benefit. It's a little too early. We started launching the ambient listening in December. We'll be done, as I said, by the end of the Q2. A little too early to tell how much benefit we'll get on the billing side, but we think there's some there. Great. Last one second here. Maybe you can just mention some, I think you flagged some quality incentive gains, and maybe you can talk about how that's progressing. Yeah. Progressing really good. We launched, really, our quality initiative a couple of years ago. As you guys are well aware, it takes a fairly long lag time between some of that quality improvement, to actually get into your publicly reported metrics, your CMS star ratings, your Leapfrog ratings. We're starting to see those benefits come through. A year ago, about 50% of our hospitals were Leapfrog As and Bs. As we sit here today, 70% of our hospitals are Leapfrog As and Bs. Over the past two Leapfrog cycles, because they issue a report twice a year, we've seen significant improvements. We've set some pretty aggressive goals. We want over 90% of our hospitals to be Leapfrog As and Bs, so we're working towards that. We're seeing really good progress. In the more recent data, even in 2025, the company had our record low mortality rate for septic shock, and record low hospital-acquired infections. That information's not yet baked into the publicly reported metrics, but as it goes in, our scores will continue to improve. Excellent, guys. Thank you so much for your time today. Always great to have you. Yeah. Thank you. Thank you. Thanks, Ben. Thank you.