Community Health Systems 2015 Annual Report Download - page 90

Capital Expenditures
Cash expenditures for purchases of facilities were $57 million in 2015, $3.1 billion in 2014 and $44 million in
2013. Our expenditures during the years ended December 31, 2015 and 2013 were primarily related to the
purchase of physician practices and other ancillary services. Our expenditures in 2014 were primarily related to
the purchase price paid by us in the acquisition of HMA (which owned and operated 71 hospitals at the time of
the completion of the HMA merger), the acquisition of four additional hospitals, and the purchase of several
surgery centers, physician practices and other ancillary services.
Excluding the cost to construct replacement hospitals, our cash expenditures for routine capital for 2015
totaled $830 million compared to $733 million in 2014 and $552 million in 2013. These capital expenditures
related primarily to the purchase of additional equipment, minor renovations and information systems
infrastructure. Costs to construct replacement hospitals totaled $123 million in 2015, $120 million in 2014, and
$62 million in 2013. The costs to construct replacement hospitals for the years ended December 31, 2015, 2014
and 2013 represent both planning and construction costs for two replacement hospitals in York, Pennsylvania and
Birmingham, Alabama. Completion of the replacement hospital, Grandview Medical Center in Birmingham,
Alabama, and transfer of all operations was completed on October 10, 2015.
Pursuant to a hospital purchase agreement in effect as of December 31, 2015, we have committed to build a
replacement facility in York, Pennsylvania by July 2017. Construction costs, including equipment costs, for the
York replacement facility are currently estimated to be approximately $125 million. We expect total capital
expenditures of approximately $800 billion to $950 billion in 2016 (which includes amounts that are required to
be expended pursuant to the terms of hospital purchase agreements), including approximately $770 million to
$900 billion for renovation and equipment cost and approximately $30 million to $50 million for construction
and equipment cost of the replacement hospital in York, Pennsylvania.
Capital Resources
Net working capital was approximately $2.1 billion at December 31, 2015, compared to $2.0 billion at
December 31, 2014, an increase of $117 million, primarily the result of an increase in patient accounts
receivable, decreases in accounts payable, accrued interest and employee compensation liabilities, and partially
offset by decreases in cash.
We have senior secured financing under a credit facility with a syndicate of financial institutions led by Credit
Suisse, as administrative agent and collateral agent. In connection with the HMA merger, we and CHS/
Community Health Systems, Inc., or CHS, entered into a third amendment and restatement of its Credit Facility,
providing for additional financing and recapitalization of certain of our term loans, including (i) the replacement
of the revolving credit facility with a new $1.0 billion revolving facility maturing in 2019, or Revolving Facility,
(ii) the addition of a new $1.0 billion Term A facility due 2019, or the Term A Facility, (iii) a Term D facility in
an aggregate principal amount equal to approximately $4.6 billion due 2021 (which included certain term C loans
that were converted into such Term D facility (collectively, the Term D Facility)), (iv) the conversion of certain
term C loans into Term E Loans and the borrowing of new Term E Loans in an aggregate principal amount of
approximately $1.7 billion due 2017 and (v) the addition of flexibility commensurate with the our post-
acquisition structure. In addition to funding a portion of the consideration in connection with the HMA merger,
some of the proceeds of the Term A Facility and Term D Facility were used to refinance the outstanding $637
million existing term A facility due 2016 and the $60 million of term B loans due 2014, respectively. The
Revolving Facility includes a subfacility for letters of credit. On March 9, 2015, CHS entered into Amendment
No. 1 and Incremental Term Loan Assumption Agreement to refinance the existing Term E Loans due 2017 into
Term F Loans due 2018, in an original aggregated principal amount of $1.7 billion. On May 18, 2015, CHS
entered into an Incremental Term Loan Assumption Agreement to provide for a new $1.6 billion incremental
Term G facility and a new approximately $2.9 billion incremental Term H facility. The proceeds of the Term G
facility and Term H facility were used to repay the Company’s existing Term D facility in full.
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