Community Health

Research evidence excerpt

Community Health

J P M O R G A N North America Credit Research

23 July 2026

It took some digging but 2Q26 beat our estimates; FYE Overweight

2026 OCF cut unfortunate but majority seems timing CYH

related; Remain committed to asset sales; Maintain OW

North America Corporate Credit -

Healthcare (HY)

Rishi S Parekh AC

(1-212) 622-2379

rishi.parekh@jpmorgan.com

J.P. Morgan Securities LLC

Recommendation. We maintain our Overweight on the 1L and 2L notes. The

quarter was not clean, but, after adjusting for the out of period benefits and hits,

EBITDA exceeded our estimate and was more in line with the street. Check, but

there’s always something that the naysayers will point to. This time it’s the FYE

2026 operating cash flow guidance, which the company has materially reduced

from its prior FYE 2026 guidance. While the original OCF guide seemed

unrealistic, we expect management to provide additional details during the call

(see below) and believe a majority of the cut is due to delays in collecting non-self

pay and non-supplemental A/R from commercial payors. While we would like

management to unpack this further, we believe the probability of collectibility is

high but the timing is unknown. We believe management remains focused on asset

sales, but we would note it’s a challenging environment. More importantly, and

while we can debate the merits of it, management is committed to uptiering the

2L30s, which can only be accomplished through asset sales. We also believe a

levered, all-1L structure will require additional (sizable) asset sales to reduce total

leverage. Risks to our OW include further deterioration in results, continued

unfavorable payor mix, and weaker investor sentiment.

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