Community Health Systems 2015 Annual Report Download - page 45

In addition, our credit facility contains restrictive covenants and requires us to maintain specified financial
ratios and satisfy other financial condition tests. Our ability to meet these restrictive covenants and financial
ratios and tests may be affected by events beyond our control, and we cannot assure you that we will meet those
tests.
A breach of any of these covenants could result in a default under our credit facility and the indentures
governing our outstanding notes. Upon the occurrence of an event of default under our credit facility or the
indentures governing our outstanding notes, all amounts outstanding under our credit facility and our outstanding
notes may become immediately due and payable and all commitments under the credit facility to extend further
credit may be terminated. The acceleration of any such indebtedness will result in an event of default under all of
our other long-term indebtedness.
Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further
exacerbate the risks described above.
We and our subsidiaries have the ability to incur substantial additional indebtedness in the future, subject to
restrictions contained in our credit facilities and the indentures governing our outstanding notes. Our credit
facility as well as a separate receivables facility provide for commitments and borrowings of up to approximately
$8.8 billion in the aggregate, of which approximately $7.9 billion is outstanding at December 31, 2015. Our
credit facility also gives us the ability to provide for one or more additional tranches of term loans and increases
in our revolving credit facility in the aggregate principal amount of up to the greater of (x) $1.5 billion and (y) an
amount such that our senior secured net leverage ratio would not exceed 4.0:1.0 without the consent of the
existing lenders if specified criteria are satisfied. If new debt is added to our current debt levels, the related risks
that we now face could be further exacerbated.
Failure to continue to achieve expected benefits of the HMA merger and to continue to integrate HMA’s
operations with ours could adversely affect us.
We have achieved synergies, and believe that we will achieve additional synergies, from the HMA merger as a
result of eliminating duplicate corporate functions and centralizing many support functions. However, we cannot
be certain whether, and to what extent, additional efficiencies and cost savings in connection with the HMA
merger will continue to be achieved in the future. For example, costs associated with HMA’s legal proceedings
and other loss contingencies may be greater than expected, and could exceed the amount of any reduction in
payment under the contingent value rights, or CVRs, issued in the HMA merger to HMA stockholders. In
addition, in order to continue to obtain the benefits of the merger, we must achieve additional efficiencies
through the integration of HMA’s operations. Such integration may be complex and the failure to do so
efficiently and effectively may negatively affect earnings.
We are the subject of various legal, regulatory and governmental proceedings that, if resolved unfavorably,
could have an adverse effect on us, and we may be subject to other loss contingencies, both known and
unknown.
We are a party to various legal, regulatory and governmental proceedings and other related matters. Those
proceedings include, among other things, government investigations. In addition, we are and may become subject
to other loss contingencies, both known and unknown, which may relate to past, present and future facts, events,
circumstances and occurrences. Should an unfavorable outcome occur in some or all of our legal, regulatory or
governmental proceedings or other loss contingencies, or if we become subject to any such loss contingencies in
the future, there could be an adverse impact on our financial position, results of operations and liquidity.
In particular, government investigations, as well as qui tam lawsuits, may lead to significant fines, penalties,
damages payments or other sanctions, including exclusion from government healthcare programs. Settlements of
lawsuits involving Medicare and Medicaid issues routinely require both monetary payments and corporate
integrity agreements, each of which could have an adverse effect on our business, financial condition, results of
operations and/or cash flows.
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