[8-K] Community Health Systems, Inc. Reports Material Event

Rhea-AI Filing Summary

Bank of Montreal (BMO) is offering US$425,000 of Senior Medium-Term Notes, Series K – “Digital Return Buffer Notes” – maturing 3 August 2026. The notes are linked to the worst performer of three U.S. equity benchmarks: the S&P 500, NASDAQ-100 and Russell 2000 (each a “Reference Asset”).

Key economic terms:

• Digital Return: 10.40% payable at maturity if the closing level of the Least Performing Reference Asset on 29 July 2026 (the Valuation Date) is ≥ 85% of its 27 June 2025 Initial Level (“Digital Barrier”).
• Buffer: first 15% downside is absorbed. If the Least Performing Reference Asset drops >15%, principal is reduced point-for-point beyond the buffer, exposing investors to a maximum loss of 85%.
• No periodic coupons; single payment at maturity.
• Issue price: 100%; agent’s commission 0.375%; estimated initial value: $981.99 per $1,000, reflecting embedded fees and hedging costs.
• Credit exposure: unsecured, unsubordinated obligations of BMO; CUSIP 06376EMN9; not FDIC or CDIC insured; not exchange-listed.

Illustrative payouts: any Final Level ≥ 85% triggers a fixed $1,104 per $1,000 note (10.40% gain). A Final Level of 80% returns $950 (-5%); 60% returns $750 (-25%); 0% returns $150 (-85%). Upside is capped at 10.40% irrespective of index performance.

Risk considerations include potential loss of up to 85% of principal, limited upside versus direct index exposure, secondary-market illiquidity (no listing; dealer market making discretionary), BMO credit risk, tax uncertainty (treated as prepaid derivative contracts), and a price-to-public that exceeds the bank’s modeled value.

The product may appeal to investors with a moderately bullish to sideways view on large-, mega- and small-cap U.S. equities over the next ~13 months who are willing to trade upside beyond 10.40% for a 15% buffer and accept issuer credit and liquidity risk.

Positive

• 10.40% fixed upside if worst-performing index finishes ≥ 85%, providing an above-market yield in a flat or modestly rising environment.
• 15% downside buffer mitigates moderate equity declines, offering partial capital protection compared with direct index exposure.
• Short 13-month tenor limits long-term market and rate uncertainty.

Negative

• Upside capped at 10.40%, materially underperforming equities if indices rally >10.4%.
• Potential loss up to 85% of principal if the worst index falls more than 15%.
• Issuer credit risk: payments depend solely on Bank of Montreal’s ability to pay.
• Liquidity risk: no exchange listing; secondary market, if any, depends on BMOCM’s discretion at likely discounts.
• Initial value below issue price ($981.99 vs $1,000) reflects embedded fees and hedging costs, creating negative carry from day one.

Insights

Structured-Product Analyst

TL;DR Limited-term note offers 10.40% fixed upside with 15% buffer but significant tail-risk and BMO credit exposure.

The design is straightforward: a 13-month digital payoff contingent on the worst of three broad U.S. indices. Statistically, the 85% barrier provides moderate protection, yet historical drawdowns in small-caps (RTY) make breach plausible. Investors forfeit all upside beyond 10.40%, so risk-adjusted appeal depends on one’s view that a <15% decline is more likely than >10.4% appreciation. The 1.88-point markup (price – modeled value) plus 0.375% commission and potential 0.35% referral fee illustrate typical structured-note friction. An estimated breakeven occurs if the worst index ends between 84.999% and 90% of initial, where the buffer or digital feature marginally outperforms passive exposure. Net: product suits yield-seeking allocators comfortable with issuer risk; not compelling for growth-oriented investors.

Portfolio Manager

TL;DR Attractive headline return, but capped upside, liquidity constraints and small-cap drag temper enthusiasm.

From a portfolio construction angle, the note behaves like a credit-linked call spread: long digital on worst-of basket, short equity upside beyond 10.4%, long put struck at 85%. Correlation among SPX/NDX/RTY means RTY dominates risk; historical vol ≈ 22% vs 15% (SPX) makes buffer less reliable. Duration just over a year mitigates rate risk but heightens reinvestment uncertainty. Lack of listing complicates exit; dealer bids likely 2–4 points under theoretical value, especially after the three-month temporary premium expires. I would size conservatively (<2% of total AUM) and treat as a tactical expression if one has high conviction of sideways markets. Impact on BMO’s credit profile is immaterial given size.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 1, 2025 (June 30, 2025)

COMMUNITY HEALTH SYSTEMS, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware			001-15925	13-3893191
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
4000 Meridian Boulevard
Franklin, Tennessee				37067
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (615) 465-7000

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.01 par value		CYH		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.01 Completion of Acquisition or Disposition of Assets.

On June 30, 2025, CHS/Community Health Systems, Inc. (“CHS”), a wholly-owned subsidiary of Community Health Systems, Inc. (the “Company”), and certain subsidiaries of CHS (the “CHS Selling Entities”), completed the transactions contemplated by that certain purchase agreement dated as of April 15, 2025, as amended (the “Purchase Agreement”), with subsidiaries of Ascension Health (the “Purchaser”), and Cedar Park Health System, L.P. (the “Joint Venture”), the entry into which Purchase Agreement was previously disclosed on a Current Report on Form 8-K, filed with the Securities and Exchange Commission (“SEC”) by the Company on April 15, 2025. Pursuant to the Purchase Agreement, at such closing, the Purchaser acquired the CHS Selling Entities’ collective 80% ownership interest in the Joint Venture, which owns and operates Cedar Park Regional Medical Center in Cedar Park, Texas, and related businesses (the transactions contemplated by the Purchase Agreement, the “Transaction”). The purchase price paid to the CHS Selling Entities in connection with the Transaction at closing on June 30, 2025, after giving effect to estimated working capital and purchase price adjustments, was $436 million in cash (subject to a post-closing working capital adjustment). In addition, contemporaneous with the closing of the Transaction, in connection with the balance of certain amounts due to the Joint Venture from CHS and in accordance with the terms of the Purchase Agreement, the CHS Selling Entities distributed approximately $23 million in cash (subject to a post-closing adjustment) to the Purchaser for their share of amounts owed to the Joint Venture by the CHS Selling Entities. Prior to the Transaction, the Purchaser held a minority interest in the Joint Venture and purchased the remaining interest through the Transaction.

The Purchase Agreement is filed as Exhibit 2.1 (which is incorporated by reference herein) in accordance with the rules of the SEC. The representations, warranties, and covenants contained in the Purchase Agreement were made solely for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, may have been qualified in the Purchase Agreement by confidential disclosure schedules (which disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representation, warranties and covenants set forth in the Purchase Agreement), may be subject to limitations and contractual risk allocation mechanisms agreed upon by the parties to the Purchase Agreement, and may be subject to standards of materiality that differ from what an investor may view as material, and thus should not be relied upon as necessarily reflecting the actual state of facts or conditions.

The Transaction constituted a significant disposition for purposes of Item 2.01 of Form 8-K. Accordingly, the pro forma information required by Item 9.01 of Form 8-K is included as Exhibit 99.1 to this Current Report on Form 8-K as provided below.

Item 8.01 Other Events.

On June 30, 2025, the Company issued a press release announcing the completion of the Transaction, a copy of which press release is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(b) Pro forma financial information

The following unaudited pro forma financial information of the Company in connection with the Transaction is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference:

•Unaudited Pro Forma Condensed Consolidated Statement of Loss for the three months ended March 31, 2025 and for the year ended December 31, 2024.

•Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2025.

•Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

(d) Exhibits

Exhibit Number		Description
2.1		Purchase Agreement dated as of April 15, 2025, as amended*
99.1		Community Health Systems, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements
99.2		Press Release of Community Health Systems, Inc. dated July 1, 2025
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of such omitted schedules and exhibits to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			COMMUNITY HEALTH SYSTEMS, INC. (Registrant)
Date:	July 1, 2025	By:	/s/ Tim L. Hingtgen
			Tim L. Hingtgen Chief Executive Officer and Director (principal executive officer)

FAQ

What return do the BMO Digital Return Buffer Notes provide at maturity?

Investors receive $1,104 per $1,000 note (a 10.40% gain) if the worst of the S&P 500, NASDAQ-100 or Russell 2000 ends at or above 85% of its initial level.

How much principal protection do the notes offer?

The notes include a 15% buffer; losses begin only if the worst index is more than 15% below its initial level, after which loss is 1-for-1 down to an 85% maximum loss.

When do the notes mature and what are the key dates?

Pricing Date: 27 Jun 2025; Settlement Date: 2 Jul 2025; Valuation Date: 29 Jul 2026; Maturity Date: 3 Aug 2026.

Are the notes listed or tradable on an exchange?

No. The notes will not be listed; any resale depends on dealer quotes from BMOCM, which may be limited and at a discount.

What is the estimated initial value versus the issue price?

BMO estimates the initial value at $981.99 per $1,000 note, below the $1,000 price, reflecting commissions and hedging costs.

What are the U.S. federal tax considerations?

BMO intends to treat the notes as pre-paid derivative contracts; however, the IRS could assert a different treatment. Investors should consult tax advisors.