All right, we're gonna go in and get started. With us today we have Community Health. On the stage is Kevin Hammons, CEO, and Tim Hingtgen, former CEO. Kevin, you know, I'll start with you. You are now a CEO, and both of you, congratulations. As a CFO, you knew the numbers, you knew all the facilities. You know, what have you learned as CEO? I know it's been a short time period, but what do you think is gonna change as you take on this new role, and what would you do differently?
Thanks, Rishi. First let me say thanks for hosting us today and for everyone joining us. You know, as I think about maybe what I've learned in the period since the transition, is how important the vision is for the company in making sure that everyone across the entire organization is aligned in working kinda towards that. I think, you know, as I kind of view the company and there were so many things going on, and I had the benefit of having, you know, had a seat at the table working very closely with Tim on strategy. We, in many instances, had competing interests.
Mm-hmm
... going on. Working with the company over the past several months, coming up with kind of a single vision, top priorities, being quality of care, physician experience, patient experience, employee satisfaction, and we're still focused highly on cash flows. At the end of the day, continuing to delever the company, continuing to improve our free cash flow generation so that we can be investing in growth, are top priorities. Some of those levers in terms of how we get there, is really focused on those experiences, which as we improve quality, improve our patient satisfaction and physician satisfaction, I think it will lead to us being able to take more market share-
Mm-hmm
as we establish ourselves as the best provider in each of our markets.
Maybe let's shift to the macro side. In the past, you've noted that the consumer, this consumer softness, and that's had an issue on, you know, outpatient emissions, et cetera. What are your thoughts for 2026, and how has this affected your guidance?
Coming into 2026, you know, we saw the Consumer Confidence Index drop at the end of the year, kind of in December. The last time we saw the Consumer Confidence Index at those levels was back in March of 2025, and we saw a pretty soft second quarter following that. Consumer confidence improved then throughout the year, and then dropped again. Certainly starting off the year, we have some expectation of some softness around volumes. Our hope will be that consumer confidence continues to improve then throughout the year, and we see it pick up, you know, particularly in the back half of the year.
I think all that's contemplated in our range of guidance, but, you know, overall, I would say our volumes and our guidance are probably low single digits, you know, little bit lighter, but we're seeing some improved rate as well. Still kind of in that mid-single digit, 5% net revenue range for improved net revenue for the year.
Just on that, on improved net revenue, obviously we have a general understanding where Medicare is, where commercial pricing is going.
Mm-hmm.
With embedded in that mix, how should we think about denials?
Denials are fairly stable, right now. I think that's a result of a couple things. I think payer behavior continues to put pressure on us. We're seeing increased numbers of denials, but the work that we're doing internally, to combat that, is allowing us to stay kinda stable. We've not seen kind of a net increase-.
Okay
... for some time.
I think your guidance was well within expectations. The one area that we've been getting questions on is your guide for operating cash flow. We talked about it in terms of, it's specifically around working capital. You know, the extra payroll-
Mm-hmm
... which is a few hundred million, and then, you know, I think your net-net was about $130, $180 million of working capital benefits, which would imply that there's probably over $300 million in working capital benefits to offset that payroll period. Can you just walk us through your comfort level in those buckets as to what's driving that?
Yeah. I'll take that one, Kevin. Thank you for having me. There's the extra pay period happens every 11 years, that's $140 million that we'll have to step over next year. We do think that we'll have positive free cash flow. It'll just be more modest next year. We have identified a handful of opportunities to improve cash flows next year. Several of them are related to accounts payable. We had some build up this past year from our conversion to ERP system that we had to pay out, we can continue to improve how we manage our AP. Inventory turnover is another area that we're able to focus on better with our new ERP.
We've got on the AR side trying to take a day out of the AR term. We've got AR collections on divested hospitals where we retain the AR, so you lose the revenue obviously, but we continue to have the cash. All of those are pretty fairly equally spread. We think there's opportunity to achieve slightly positive free cash flow.
2026.
On DPP. 2026 does not include any out-of-periods. Does not include any additional DPP that could come from Texas, Florida, and Indiana. Can you just update us on what you're seeing out of the three states? Obviously, the big focus is being Indiana. There seems to be some challenges in Indiana, that's been a big question.
Yeah, you want to talk Indiana?
Yeah. No. Sure.
Okay.
I'll take Indiana. I'll let you take the other states.
Yeah.
I mean, Indiana's gone back and forth with CMS now, for some time, on their program. They've did a pre-print. They've been working closely with CMS. They've adjusted their program, and resubmitted an amended program. We don't know exactly what the structure of the resubmission is. From our vantage point, the fact that CMS is working closely with the state-
Yeah
... indicates that CMS has not said no. That the, they allowed Indiana to make those adjustments. I believe that that signals an increased likelihood that a program gets approved.
Okay
... in Indiana. In terms of quantifying, what that is, we don't have the information to be able to do that. I think the likelihood of a program getting approved's greater.
Is greater. Okay.
The other two states it's actually Florida and Georgia.
Yeah, Florida. Yeah.
They've submitted, and that was more normal course. They're, I think, in the queue, awaiting approval. I know there has been activity recently, where CMS has approved some of these programs, including one in Georgia. It's just not the one that is impactful to our hospital there. In a few years, we have the DSH cuts coming through, specifically on the DPP side. We've spoken about what you may do to mitigate those cuts. It's been, you know, five or six months. Can you maybe just walk us through how you plan to mitigate those cuts, and when do you anticipate starting that mitigation effort?
I think, you know, we've already started. You know, there's a number of cost-cutting, kind of margin, improvement or impact initiatives that we have ongoing, things that we do every year. Particularly around the ERP, I think there's some runway. There's a couple years ahead of us still on benefits that we.
Yeah
... can extract out of that, improve our margins, take costs out. Oracle itself is adding significant capabilities to the ERP, particularly around AI. I'm sure we'll talk a little bit about that here in a moment. As they add AI components into the ERP, that should allow us to add additional efficiencies, take out additional costs out of the process. As we just continue to mature our own workflows with the new ERP, I believe there's cost savings that will help mitigate some of those mitigation cuts.
Is the anticipation that you'll mitigate pretty much 100% of the cuts, 80%, 60% of the cuts? How should we think about that?
I think the majority-
Okay
of the cuts will probably be mitigated. We've estimated now. With our divestitures, now the new estimation is $250 million-$300 million.
Mm-hmm
... of cuts over the period through 2038.
Yep.
I think, you know, efficiencies over that period of time, we'll be able to mitigate that.
Okay. Asset sales. In the last call, you said that these sales are dwindling. Can you maybe just, one, talk us through the Alabama asset sale is one of few that's still remaining as part of what you had communicated in Q3. Can you quantify how many that you're, you know, actively pursuing in terms of asset sales? When you say dwindling, is it less than what we saw last year? Is it, you know, how should we just think about 2026, the setup for asset sales?
There's still a couple deals currently in flight where we have inbound interest but not far enough along that we would be ready to talk about those deals or to know with certainty that they'll get across the finish line. It would be less in terms of quantum than it was in 2026 or 2025, I'm sorry, excluding what we've already gotten done...
Got it. Yeah.
... in 2026. At the end of the day, 2026, we'll probably have.
Yeah
... greater asset sales.
The ones that you're working on, are they similar in size relative to what you've seen before, or are they smaller, larger?
Both.
Okay.
Yeah. I would say there's a smaller deal. There's one that's similar size.
Okay. The Clarksville sale was unique 'cause you had the buyer dealing with maybe competitors coming in, and I'm not sure if that was in any way associated with the CON laws. I believe under the Rural Fund, to access some of the dollars starting in 2028, the state has to eliminate any anything that impedes access to healthcare. That is, I believe, some of the CON laws. Tennessee is looking to eliminate their CON laws. Has that accelerated or changed how you guys are thinking about your assets in general?
Not really.
Okay.
No. you know, we still have a couple states that have CON rules in place, although, you know, Florida has now eliminated them. Tennessee is working-
Yeah
to eliminate them. many of our states don't have CONs. I think where we really looked at Clarksville, we had a situation where we had two entrant, new entrants, into the market. regardless of how we operated there, that market was gonna get diluted. as we looked at, you know, longer horizon, on EBITDA generation and on capital requirements, to compete in a much more, competitive market. The competitors coming in, had the advantage of rates because of their presence in Nashville.
Yep.
They had much higher rates than we did. Then we get a really good offer, you know, that allows us to delever. It was more of an opportunistic transaction for us.
Yep. Where do you stand in the Alabama process? A lot of questions on whether how the FTC is gonna view that sale. Where does that stand today, and when do you think it, what's the updated timing on closing that deal?
I think the updated timing will be second quarter.
Mm-hmm
... of closing that deal. We don't believe that there are any impediments.
Okay
... to getting that closed.
Can you update us on the Rural Fund? There's been a lot of delays. Where do we stand today on that process?
Yeah. I'll take that one. We do know that our states, the states in which we operate, have been allocated $2.8 billion in this first year. They're in various stages of determining how those funds will ultimately be used. There's some approval that will have to happen for the state budgets to be able to extend them. We formed a governance committee to make sure that we've got the right strategy, and we can evaluate each of those. There's a couple states that have already asked for some indication of interest, and we're participating in those. Don't yet know what the impact could be to us. It will be beneficial, but we probably won't know until later this year.
Timing-wise, these will likely, the cash probably won't start coming down to providers until definitely the second half of this year.
Retroactive to the beginning of the year.
That's right. You actually have until, I think, this first year will go into the federal fiscal year, which will end in 2027.
Okay.
there's a little bit of a...
The five years will kind of be spread out a little more.
Spread out. Yeah.
There's been a lot of questions and concerns around Medicaid. Less to do with hospitals, but would love to just get your thoughts in terms of what you're seeing in the Medicaid environment. You know, I know it's a midterm year. You're probably not gonna see states becoming too aggressive. How are states just also addressing or thinking about OBHA and what they may have to do to offset that impact? How does that kinda trickle down to the Medicaid aspects of it?
Yeah. We've not seen, the states that we're in take any real action.
Mm-hmm
... , to this point
Okay
... around Medicaid. We're thinking, at least as I look at 2026, it's pretty much status quo, on Medicaid.
Supply expenses. Some of the GPOs have just noted that there could be some natural price increases just based upon how things roll off, new contracts, et cetera. Some of the tariff costs from last year might have to kinda flow through to potentially some of these hospital systems. You're protected, generally speaking, from my understanding under these GPOs.
Mm-hmm.
What are you estimating in terms of, what are you seeing in terms of price increases in 2026? Is there a headwind that we should anticipate, whether it's, you know, later this year or in 2027, as it relates to some of the costs that we saw last year?
We're a member of the HealthTrust GPO, which we have in equity ownership. For 2026, you know, our contracts generally renew on a rolling basis every three years. We get about a third of them or so every year. 2026, I don't think we're not expecting to see a significant increase, nothing more than an inflationary increase. The GPO takes certain actions to mitigate those risks to make sure that, you know, have the right types of contracts and products. Then we do the same on our side, with our ERP. That's one of the advantages that we can really see across the system to make sure that we're purchasing on contract.
We're not just on contract, but the, making sure that the preference, that we're using the right items, that have the best price. In the, in the near term, no. In the long term, I suppose that if there's a 10% tariff on everything, that over time, that will-
You'll see it. Yeah.
... it will, yeah, everyone will see it.
Couple things I might add. Over 50% of our supply purchases are domestic purchases, so there's some level of protection there, although we don't have clear insight into where some of the raw materials may be coming from. We don't have any significant exposure to some of the locations that have the risk of higher tariffs. I think that's a mitigating factor. Then as Tim Hingtgen mentioned, with the work with our ERP and some of what we believe we can mitigate a significant portion of the cost increases by being more efficient, purchasing either different items or the right items and being more compliant within the GPO.
Okay. just on labor, can you just walk us through your full-time and just agency exposure today? Do you think it's at the optimal level, or do you think that there might be some changes?
I think we've stable. I think we're at the optimal, the level of use of contract labor.
Yep.
Not expecting any significant increase next year.
Okay. On the professional expenses, you noted that it will increase this year, but not as high as 2025. Is that just because you're pushing back on the subsidies? What's driving that less of a increase?
I think it's contracting and trying to make sure that we are negotiating the best arrangement as possible, and when we're able to try to insource, rather than to use outsourced, when that opportunity does present itself.
We're probably also running out of doctors who are just coming on to these contracts too, 'cause they've all kinda worked their. Most of them have worked their way through and are already, you know, getting subsidy payments.
Yep. Okay.
At least in terms of, you know, it started with the ER physicians and hospitalist groups and then anesthesiology got to be big. Radiology's kind of the most recent one. You don't have any other beyond that groups of physicians.
Yep
... that we would be contracting with, that would expose us to continuing increases.
You've internalized, at least mostly, the ER side, if not all of it.
Mm-hmm.
You've talked about radiology and anesthesiology. Walk us through, you know, the stumbling blocks that you see in internalizing some of these solutions, because it's been talked about for a few years now? I get it. It's not easy.
Mm-hmm.
What are you seeing in terms of, one, the challenges, but also maybe the opportunities on that front?
One of the challenges is availability. And, you know, finding, in terms of anesthesiology, anesthesiologists that are willing to come into the employed model.
Mm-hmm.
I mean, there is a shortage of anesthesiologists. There's a shortage of radiologists. As we think about radiology and what some of the technology will be changing that in the coming years, I think in some respects they've accelerated and see they have a short window for asking for some of these subsidies. In some respects, they've accelerated our desire and the work that we're doing to go out and find alternatives.
Mm-hmm
... to using, whether that's remote, doing remote reading.
Yep
... using technology. There's an AI component to radiology that can make some of those reads more easily done, you know, externally than having radiologists on site.
Okay. We'll get to the AI in a second, but before we get there, just going back through some of the pricing. On the commercial side, you know, all the big payers are getting hit left and right. What are you seeing? Can you talk through your contracted rates for 2026, 2027, and, you know, just your visibility on the out years?
We're at a 3%-5% rate increase for 2026, and we're about 90% contracted.
Mm-hmm
... for the year 2026, and maybe 50% or so for 2027.
Mm-hmm
I think we're still expecting that same 3%-5% currently.
Mm-hmm.
Okay. Okay. Indiana Bill, I think it was four or five, was going to limit some of the not-for-profits in terms of how they price, relative to commercial plans, if I'm not mistaken. You know, that bill was passed last year. How has that bill affected Community in Indiana, or has it?
I don't think it's really affected us.
Okay.
Yeah.
Meaning that you haven't seen the benefit of it, or you just haven't seen, 'cause I, you do compete with, I think IU Health is part of that process, if I'm not mistaken. I'm not sure if Parkview was also part of that, you know.
They-
... consideration 'cause they're the not-for-profits I think that were being targeted.
Yeah. Yeah. They were, you know, I think what they called the top five not-for-profits, the most expensive, the not-for-profits with the highest charges.
Right
... in the state. You know, the bill targeted them and their reimbursement. It really hasn't changed, doesn't change our reimbursement.
Yeah. Yeah.
It really hasn't impacted us, and we've not really seen any residual impact at this point.
Okay. Then, you know, IU Health has been building out that facility in Fort Wayne. Where does that facility stand today? Just your thoughts in terms of the competitive dynamics in Fort Wayne.
it's scheduled to be open in 2027.
Mm-hmm.
It's still, you know, some time off. I'm not sure if they're on schedule or not with their construction. It is being constructed on the south side of Fort Wayne. In fact, the majority of the population growth in that market is all on the north side.
Mm-hmm
... and closer to our facilities and where we're expanding, our additional footprints and access points. I mean, at this point, no impact at all from that facility.
Okay, let's talk about the expansion of those access points. Maybe since you mentioned it, let's start with Fort Wayne. What are you doing at Fort Wayne? We'll kinda dive into some of the other markets.
We're always looking for opportunities to expand, whether that's in, you know, surgery centers, freestanding emergency departments, both of which, we've opened in Fort Wayne and are looking at other opportunities. Across a number of our markets, we'll probably open four to five freestanding EDs, this year, and probably, you know, five to 10 surgery centers.
Mm-hmm.
Those are key access points. We're also looking at urgent care centers, individual, clinic opportunities where we'll either open up or acquire practices. As we focus a lot of our capital, particularly this year, now that we've completed some of our large inpatient projects that we've had in flight over the last couple years, I think 2026 will be largely focused on outpatient access points.
As you think about the Fort Wayne market and the expansion of the beds from, just across the, the systems that are in that market, is that market getting deeper, to support the number of beds that are being added?
deeper in terms of.
Of population
Yeah. I mean, I think it is. As we focus on, you know, our, service lines.
Mm-hmm
... and making sure that we're offering, you know, the right service lines, taking advantage, where there are opportunities, partnering with the right physicians. We've got, with our joint venture there, I think we're partnered with about 150 of the physicians, in the market, through our joint venture. I think we've got a really good hold.
Mm-hmm
... on the market. We've taken over that market in terms of numbers of births.
Mm
... babies. In fact, we're now,
That was not the case a few years ago.
It was not the case.
Yeah. Okay
... a few years ago.
Yeah.
Parkview-
Yeah, yeah
... was the biggest, and we're now the biggest.
Okay
... in the market.
Okay
... I think we're continuing to grow and do good work there.
Okay. You know, you've been adding urgent care centers, so then talk through some of the other access points that you're adding throughout your geographic exposure, and then maybe allocation of dollars towards that expansion.
In terms of allocation of dollars, I'd say a little over 50% of our capital would be related to growth capital. Even as we have divested facilities, our capital spending's remaining, you know, at least flat or slightly increasing. We're spending more per facility in terms of capital, and that additional growth, or those additional dollars would be primarily related to growth capital.
Where do you see those opportunities? Is it, in Tennessee, Texas? I mean, Texas is obviously a very crowded market. I assume that maybe there could be some opportunities there, but where are you seeing the expansion?
We're seeing it in a number. Birmingham continues. We see great opportunities there. Naples, Florida, across Texas. These are growing markets. Those markets demographically are growing at a rate higher than kinda the national averages. We're seeing, you know, tremendous opportunities across all those. Last year, we made some investments, and over the past couple years, in Tucson, we see some, you know.
Mm-hmm
... growth opportunity there as well.
With the inpatient-only list, I know you're adding ASCs in some of your markets, but has that accelerated maybe the focus in adding more of these ASCs? How quickly can you ramp up in adding these ASCs? 'Cause obviously that comes with the doctors that you need to hire and find.
It does. That's a gating issue, particularly in markets, the size that we operate in, is making sure that you're aligned with the right physician, or group of physicians. In some cases, those ASCs, you know, we could look to either partner with existing ASCs, acquire them, in some case they're de novo builds. It all depends on the market.
Mm-hmm.
Generally, that's a much quicker to market capital spend than an inpatient...
Yeah
... build, adding a tower, which we've, you know, done over the past couple years, in a number of markets where we've been, you know, coming up on, capacity constraints, like Foley, Alabama, in Naples, Florida, and Knoxville, Tennessee.
Have you seen in some of your hospitals where you're reassessing the inpatient/outpatient, you know, real estate just because there's more of an outpatient? We've heard that from some of the hospitals. Is that something that you guys are actively doing as well?
it is. I mean, certainly we consider that as we think about, you know, the future, do our, you know, three-year planning, for markets and what capacity, we'll need, you know, where we are today and what capacity, we think what it will look like, down the road. Certainly part of the equation.
Let's talk about your cap structure. You have a sizable amount of pro forma cash post these asset sales, not including Alabama for the time being. But you still have a sizable amount of cash. You've maxed the 10% on the 2032s. I think you have one more remaining this year after December, if I'm not mistaken.
Mm-hmm.
You have one more on the 9.75%. You're increasing your first lien capacity. I just maybe starting first, where do you see that first lien capacity today? Then are you limited in accessing that first lien capacity while the 2029s and the thirties, the first lien 2029s and thirties are outstanding?
As we sit here today, we would evaluate our first lien capacity approximately $750 million.
Okay.
I think 745.
Excluding the ABL or including the ABL?
Excluding.
Okay, great.
Excluding the ABL. Given the quantum of proceeds that have come in, over this past year and what we expect to come in, we will need to focus any debt repayments on first lien.
Yeah
debt. I don't believe that there's any restrictions on the use of that capacity, you know, even with the 2029s and 30 first liens out there. I don't, I don't believe that.
Okay. Okay.
... would-
Yeah.
... would restrict us.
I mean, that's our view as well.
Mm-hmm.
Yeah, just make sure. Then as you think about what you have to use of, the proceeds towards, with some of the 10% options, not available, are you then focused on near-term maturities, or are you just gonna be opportunistic throughout the structure?
You know, I think we will, we'll be opportunistic, but if we, you know, focus on the three tranches of 2031, 2032s and 2033s, those do have the advantage of increasing our first lien capacity.
Yep. Yeah.
That is another consideration that we would certainly throw in the mix in terms of what we might target.
Okay. AI is a common theme in this event. How is Community harnessing AI and where are you using it? Where do you think it's actually been or where do you think it could be most beneficial to the organization? I know it's early stages, but.
I think there's a couple areas that we're already using it. A couple areas certainly we'll be targeting. We are rolling out ambient listening. It's partially rolled out starting with our emergency departments in our hospitals groups and then moving towards our outpatient or physician clinic...
Mm-hmm
practices, which we've launched recently. I think there's a lot of benefit there. We're already using some AI in our revenue cycle areas to assist with appeals and so forth. With our ERP, there is AI being built into the ERP itself.
Mm-hmm
... kind of from Oracle, that as we mature that process, we'll have a lot of opportunities, to use AI to generate efficiencies in our transaction processing. There's a few other clinical areas, like sepsis, like our virtual sitter program that has some embedded AI in it. Really across the spectrum, there's a number of areas.
What is the sepsis area with AI?
Yeah.
It's obviously a big, you know, issue as it relates to hospitals. How are you using that?
Sure. There's an AI component that can help us identify patients who are at risk...
Mm-hmm
... for sepsis, and then notify the doctors. That gives them kind of an advance notice on when to provide medication.
Okay. On the ambient AI side, you know, being used in the ER, one of the issues that we've heard is just the noise. How is your use of ambient AI? Are you finding that to be a challenge in terms of all the noise that's within the ER? Is it catching everything that is needed, or is it still kind of early stages?
we've not heard, or at least I've not heard, any issues around that...
Okay
... at this point.
Has that helped from a collection standpoint, meaning that you could transcribe that data and immediately send it in, or is it go through a few more steps and processes before you actually go through the collections process?
It still goes through a few more processes, and we're probably too early.
Yeah. Okay
... in, our use of it to really have noticed, the significance on the collection side, but certainly something we'll be monitoring going forward.
Okay. I wanted to save a little bit more time for the audience, but we have about a minute. If anyone has any questions, please raise your hand. No questions. That's great. All right. If you think about where AI is going now, what do you think are the next steps, and where do you think you will need to actually invest in as it just relates to, you know, you looking across the spectrum?
I think it's an interesting question, and how we're thinking about it is probably changing over time. Early on, as we were thinking through AI, I think a number of people, as they were thinking how they would use AI, we were focused on developing internally.
Mm-hmm.
Because the use cases were just being developed. As we sit here today and things are changing so quickly, a lot of those use cases are now have been proven. There's products out there. A lot of your software vendors are baking AI into their products already. As we just refresh some of the software we're already using, you get your new license or renew your licenses, now that product's being updated, and has AI components built in. In other cases, instead of going through a process to develop it, you can go out and buy a proven product.
Okay
... that's being used somewhere else. I think, you know, how we're thinking about it is evolving, because the whole AI space has evolved so quickly.
Well, we've hit the end of our presentation or our fireside chat. Thank you so much.
Okay. Thanks, Rishi.
I appreciate it.
Thank you, everyone.
Yeah. Thank you. All right. Thank you.