Investor Contact:  

Alfred Lumsdaine

Executive Vice President

and Chief Financial Officer

(615) 221-4936

•

Net operating revenues decreased $57.5 million to $472.6 million, compared to $530.1 million for the same period in 2017. The $57.5 million decline in the net operating revenues for the quarter was primarily attributable to a $73.1 million decrease from the hospitals sold or closed subsequent to the prior period, partially offset by a $7.9 million increase related to revenues from the California Hospital Quality Assurance Fee (“HQAF”) program, of which there were no comparable revenues in the same 2017 period. Excluding the divested hospitals of $73.1 million and the California HQAF revenues of $7.9 million, net operating revenues increased $7.7 million in the three months ended June 30, 2018 compared to the same period in 2017, primarily due to an improved payor mix and an increase in rate and acuity.

•

Net income (loss) was $(25.9) million compared to $(30.6) million for the same period in 2017. The net loss for the three months ended June 30, 2018 was impacted by $3.3 million of costs related to the closure of one hospital and $4.1 million in severance related to headcount reductions.

•

Net loss attributable to Quorum Health Corporation was $(26.6) million, or $(0.92) per share, compared to $(30.6) million, or $(1.09) per share, for the same period in 2017.

•

On a same-facility basis, as defined in footnote (k), admissions decreased 3.0%, adjusted admissions decreased 1.8% and net operating revenues per adjusted admission increased 5.3% compared to the same period in 2017.

•

Adjusted EBITDA was $36.3 million compared to $34.4 million for the same period in 2017.

•

Adjusted EBITDA, Adjusted for Divestitures, which is further adjusted to exclude the effect of EBITDA of hospitals either sold or closed as of June 30, 2018, was $39.6 million compared to $43.4 million for the same period in 2017.

•

Net operating revenues decreased $98.3 million to $959.5 million, compared to $1,057.8 million for the same period in 2017. The $98.3 million decline in the net operating revenues for the six months was primarily attributable to a $133.7 million decrease from the divested hospitals, partially offset by a $15.8 million increase related to revenues from the HQAF program as discussed above. Excluding the divested hospitals of $133.7 million and the California HQAF revenues of $15.8 million, net operating revenues increased $19.6 million in the six months ended June 30, 2018 compared to the same period in 2017, primarily due to favorable payor mix and an increase in rate and acuity.

•

Net income (loss) was $(124.4) million compared to $(57.8) million for the same period in 2017. The net loss for the six months ended June 30, 2018 was impacted by $39.8 million of impairment of long-lived assets, $17.1 million of costs related to the closure of one hospital, $8.1 million of net losses on the sale of two hospitals and $6.0 million in severance related to headcount reductions.

•

Net loss attributable to Quorum Health Corporation was $(125.6) million, or $(4.37) per share, compared to $(58.2) million, or $(2.08) per share, for the same period in 2017.

•

On a same-facility basis, admissions decreased 1.3%, adjusted admissions decreased 0.4% and net operating revenues per adjusted admission increased 4.3% compared to the same period in 2017.

•

Adjusted EBITDA was $54.7 million compared to $60.6 million for the same period in 2017.

•

Adjusted EBITDA, Adjusted for Divestitures, which is further adjusted to exclude the effect of EBITDA of hospitals either sold or closed as of June 30, 2018, was $66.4 million compared to $74.3 million for the same period in 2017.

Three Months Ended June 30,

2018

2017

% of

% of

$  Amount

Revenues

$  Amount

Revenues

Operating revenues ^(a)

$

585,215

Provision for bad debts ^(b)

55,069

Net operating revenues

$

472,632

100.0

%

530,146

100.0

%

Operating costs and expenses:

Salaries and benefits

232,631

49.2

%

265,309

50.0

%

Supplies

52,897

11.2

%

64,112

12.1

%

Other operating expenses ^(a)

144,456

30.6

%

157,613

29.8

%

Depreciation and amortization

17,142

3.6

%

20,586

3.9

%

Rent

11,358

2.4

%

12,152

2.3

%

Electronic health records incentives earned

(445

)

(0.1

)%

(1,777

)

(0.3

)%

Legal, professional and settlement costs

5,417

1.1

%

3,934

0.7

%

Impairment of long-lived assets and goodwill

—

—

%

12,900

2.4

%

Loss (gain) on sale of hospitals, net

307

0.1

%

(4,321

)

(0.8

)%

Loss on closure of hospitals, net

3,338

0.7

%

—

—

%

Transaction costs related to the Spin-off

—

—

%

—

—

%

Total operating costs and expenses

467,101

98.8

%

530,508

100.1

%

Income (loss) from operations

5,531

1.2

%

(362

)

(0.1

)%

Interest expense, net

31,926

6.8

%

30,458

5.7

%

Income (loss) before income taxes

(26,395

)

(5.6

)%

(30,820

)

(5.8

)%

Provision for (benefit from) income taxes

(454

)

(0.1

)%

(245

)

—

%

Net income (loss) ^(c)

(25,941

)

(5.5

)%

(30,575

)

(5.8

)%

Less: Net income (loss) attributable to noncontrolling interests

665

0.1

%

55

—

%

Net income (loss) attributable to Quorum Health Corporation

$

(26,606

)

(5.6

)%

$

(30,630

)

(5.8

)%

Earnings (loss) per share attributable to Quorum Health Corporation stockholders:

Basic and diluted ^(d)

$

(0.92

)

$

(1.09

)

Weighted-average shares outstanding:

Basic and diluted

28,995,564

28,145,215

Six Months Ended June 30,

2018

2017

% of

% of

$  Amount

Revenues

$  Amount

Revenues

Operating revenues ^(a)

$

1,173,160

Provision for bad debts ^(b)

115,374

Net operating revenues

$

959,452

100.0

%

1,057,786

100.0

%

Operating costs and expenses:

Salaries and benefits

479,631

50.0

%

529,911

50.1

%

Supplies

111,783

11.7

%

127,934

12.1

%

Other operating expenses ^(a)

297,194

31.0

%

321,037

30.4

%

Depreciation and amortization

35,403

3.7

%

42,706

4.0

%

Rent

23,890

2.5

%

24,254

2.3

%

Electronic health records incentives earned

(586

)

(0.1

)%

(4,229

)

(0.4

)%

Legal, professional and settlement costs

8,830

0.9

%

4,469

0.4

%

Impairment of long-lived assets and goodwill

39,760

4.1

%

16,200

1.5

%

Loss (gain) on sale of hospitals, net

8,122

0.8

%

(5,191

)

(0.5

)%

Loss on closure of hospitals, net

17,084

1.8

%

—

—

%

Transaction costs related to the Spin-off

—

—

%

31

—

%

Total operating costs and expenses

1,021,111

106.4

%

1,057,122

99.9

%

Income (loss) from operations

(61,659

)

(6.4

)%

664

0.1

%

Interest expense, net

62,857

6.6

%

57,988

5.5

%

Income (loss) before income taxes

(124,516

)

(13.0

)%

(57,324

)

(5.4

)%

Provision for (benefit from) income taxes

(88

)

—

%

456

0.1

%

Net income (loss) ^(c)

(124,428

)

(13.0

)%

(57,780

)

(5.5

)%

Less: Net income (loss) attributable to noncontrolling interests

1,146

0.1

%

411

—

%

Net income (loss) attributable to Quorum Health Corporation

$

(125,574

)

(13.1

)%

$

(58,191

)

(5.5

)%

Earnings (loss) per share attributable to Quorum Health Corporation stockholders:

Basic and diluted ^(d)

$

(4.37

)

$

(2.08

)

Weighted-average shares outstanding:

Basic and diluted

28,726,445

27,977,738

Three Months Ended June 30,

2018

2017

Variance

% Variance

Consolidated:

Number of licensed beds at end of period ^(e)

2,649

3,168

(519

)

(16.4

)%

Admissions ^(f)

18,200

22,270

(4,070

)

(18.3

)%

Adjusted admissions ^(g)

45,551

55,634

(10,083

)

(18.1

)%

Total surgeries ^(h)

19,114

26,954

(7,840

)

(29.1

)%

Emergency room visits ⁽ⁱ⁾

135,389

167,575

(32,186

)

(19.2

)%

Medicare case mix index ^(j)

1.44

1.43

0.01

0.7

%

Same-facility: ^(k)

Number of licensed beds at end of period ^(e)

2,649

2,675

(26

)

(1.0

)%

Admissions ^(f)

18,200

18,761

(561

)

(3.0

)%

Adjusted admissions ^(g)

45,551

46,408

(857

)

(1.8

)%

Total surgeries ^(h)

19,114

19,741

(627

)

(3.2

)%

Emergency room visits ⁽ⁱ⁾

135,389

136,215

(826

)

(0.6

)%

Medicare case mix index ^(j)

1.44

1.40

0.04

2.9

%

Six Months Ended June 30,

2018

2017

Variance

% Variance

Consolidated:

Number of licensed beds at end of period ^(e)

2,649

3,168

(519

)

(16.4

)%

Admissions ^(f)

38,749

45,926

(7,177

)

(15.6

)%

Adjusted admissions ^(g)

94,779

112,501

(17,722

)

(15.8

)%

Total surgeries ^(h)

39,701

52,902

(13,201

)

(25.0

)%

Emergency room visits ⁽ⁱ⁾

289,186

340,514

(51,328

)

(15.1

)%

Medicare case mix index ^(j)

1.44

1.41

0.03

2.1

%

Same-facility: ^(k)

Number of licensed beds at end of period ^(e)

2,649

2,675

(26

)

(1.0

)%

Admissions ^(f)

37,634

38,120

(486

)

(1.3

)%

Adjusted admissions ^(g)

91,902

92,272

(370

)

(0.4

)%

Total surgeries ^(h)

37,770

38,372

(602

)

(1.6

)%

Emergency room visits ⁽ⁱ⁾

276,271

273,912

2,359

0.9

%

Medicare case mix index ^(j)

1.43

1.40

0.03

2.1

%

June 30,

December 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

2,822

$

5,617

Patient accounts receivable, net of allowance for doubtful accounts of $352,509 at December 31, 2017

327,480

343,145

Inventories

46,780

53,459

Prepaid expenses

25,364

21,167

Due from third-party payors

69,189

97,202

Current assets of hospitals held for sale

—

8,112

Other current assets

45,442

47,440

Total current assets

517,077

576,142

Property and equipment, at cost

1,335,404

1,405,184

Less:  Accumulated depreciation and amortization

(730,623

)

(729,905

)

Total property and equipment, net

604,781

675,279

Goodwill

401,456

409,229

Intangible assets, net

53,445

64,850

Long-term assets of hospitals held for sale

—

7,734

Other long-term assets

87,824

95,607

Total assets

$

1,664,583

$

1,828,841

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of long-term debt

$

1,733

$

1,855

Accounts payable

154,575

171,250

Accrued liabilities:

Accrued salaries and benefits

82,125

77,803

Accrued interest

10,221

10,466

Due to third-party payors

40,670

47,705

Current liabilities of hospitals held for sale

—

2,577

Other current liabilities

45,912

43,687

Total current liabilities

335,236

355,343

Long-term debt

1,197,679

1,212,035

Deferred income tax liabilities, net

7,799

7,774

Other long-term liabilities

130,163

137,954

Total liabilities

1,670,877

1,713,106

Redeemable noncontrolling interests

2,301

2,325

Equity:

Quorum Health Corporation stockholders' equity (deficit):

Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, none issued

—

—

Common stock, $0.0001 par value per share, 300,000,000 shares authorized; 30,898,710 shares issued and outstanding at June 30, 2018, and 30,294,895 shares issued and outstanding at December 31, 2017

3

3

Additional paid-in capital

552,511

549,610

Accumulated other comprehensive income (loss)

(2,031

)

(1,956

)

Accumulated deficit

(573,790

)

(448,216

)

Total Quorum Health Corporation stockholders' equity (deficit)

(23,307

)

99,441

Nonredeemable noncontrolling interests

14,712

13,969

Total equity (deficit)

(8,595

)

113,410

Total liabilities and equity

$

1,664,583

$

1,828,841

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Cash flows from operating activities:

Net income (loss)

$

(25,941

)

$

(30,575

)

$

(124,428

)

$

(57,780

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

17,142

20,586

35,403

42,706

Non-cash interest expense, net

2,723

700

4,534

1,430

Provision for (benefit from) deferred income taxes

(511

)

(346

)

25

255

Stock-based compensation expense

2,756

2,531

5,220

5,328

Impairment of long-lived assets and goodwill

—

12,900

39,760

16,200

Loss (gain) on sale of hospitals, net

307

(4,321

)

8,122

(5,191

)

Non-cash portion of loss on hospital closures

1,089

—

6,394

—

Changes in reserves for self-insurance claims, net of payments

4,355

7,042

10,380

11,254

Changes in reserves for legal, professional and settlement costs, net of payments

—

—

—

(3,651

)

Other non-cash expense (income), net

56

47

7

5

Changes in operating assets and liabilities, net of acquisitions and divestitures:

Patient accounts receivable, net

19,645

(13,186

)

21,074

(30,349

)

Due from and due to third-party payors, net

19,761

4,366

20,978

15,407

Inventories, prepaid expenses and other current assets

(1,519

)

8,942

(229

)

(7,732

)

Accounts payable and accrued liabilities

(19,301

)

(36,773

)

(9,714

)

1,292

Long-term assets and liabilities, net

(3,368

)

606

(2,925

)

1,871

Net cash provided by (used in) operating activities

17,194

(27,481

)

14,601

(8,955

)

Cash flows from investing activities:

Capital expenditures for property and equipment

(10,791

)

(15,925

)

(25,319

)

(39,142

)

Capital expenditures for software

(531

)

(1,663

)

(1,044

)

(3,169

)

Acquisitions, net of cash acquired

(26

)

(1,887

)

(58

)

(1,887

)

Proceeds from the sale of hospitals

507

15,874

39,170

20,156

Other investing activities, net

52

—

249

—

Net cash provided by (used in) investing activities

(10,789

)

(3,601

)

12,998

(24,042

)

Cash flows from financing activities:

Borrowings under revolving credit facilities

115,000

130,000

247,000

302,000

Repayments under revolving credit facilities

(119,000

)

(158,000

)

(233,000

)

(252,000

)

Borrowings of long-term debt

55

72

67

72

Repayments of long-term debt

(30,820

)

(4,738

)

(31,447

)

(11,847

)

Payments of debt issuance costs

—

(2,891

)

(2,268

)

(2,938

)

Cancellation of restricted stock awards for payroll tax withholdings on vested shares

(1,309

)

(461

)

(1,943

)

(1,489

)

Cash distributions to noncontrolling investors

—

(37

)

(803

)

(3,851

)

Net cash provided by (used in) financing activities

(36,074

)

(36,055

)

(22,394

)

29,947

Net change in cash, cash equivalents and restricted cash

(29,669

)

(67,137

)

5,205

(3,050

)

Cash, cash equivalents and restricted cash at beginning of period

40,491

89,542

5,617

25,455

Cash, cash equivalents and restricted cash at end of period

$

10,822

$

22,405

$

10,822

$

22,405

(a)

The California Department of Health Care Services administers the HQAF program, imposing a fee on certain general and acute care California hospitals. Revenues generated from these fees provide funding for the non-federal supplemental payments to California hospitals that serve California’s Medicaid (“Medi-Cal”) and uninsured patients. Under Phase V of the program, the Company recognized $7.9 million of net operating revenues less $2.1 million of provider taxes for the three months ended June 30, 2018 with no corresponding amounts in the three months ended June 30, 2017. For the six months ended June 30, 2018, the Company recognized $15.8 million of net operating revenues less $4.2 million of provider taxes with no corresponding amounts in the six months ended June 30, 2017. The revenues and fees paid for the full year 2017 were recognized in the fourth quarter of 2017 when CMS approved the program.

(b)

On January 1, 2018, the Company adopted ASC Topic 606 “Revenue from Contracts with Customers” using the modified retrospective method as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605. Prior to the adoption of ASC Topic 606, a significant portion of the Company’s allowance for doubtful accounts related to self-pay patients, as well as co-pays and deductibles owed to the Company by patients with insurance. Under ASC 606, the estimated allowance for these patients are generally considered a direct reduction to net operating revenues rather than as a provision for bad debts.

(c)

EBITDA is a non-GAAP financial measure that consists of net income (loss) before interest, income taxes, depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back the effect of certain legal, professional and settlement costs, impairment of long-lived assets and goodwill, net loss (gain) on sale of hospitals, net loss on closure of hospitals, transition of transition services agreements (“TSAs”), transition costs related to the Spin-off, and post-spin headcount reductions and executive severance. The Company uses Adjusted EBITDA as a measure of financial performance. Adjusted EBITDA is a key measure used by the Company’s management to assess the operating performance of its hospital operations business and to make decisions on the allocation of resources. Additionally, management utilizes Adjusted EBITDA in assessing the Company’s results of operations and in comparing the Company’s results of operations between periods. Adjusted EBITDA, Adjusted for Divestitures, also a non-GAAP financial measure, is further adjusted to exclude the effect of EBITDA of hospitals either sold or closed as of June 30, 2018. The Company has presented Adjusted EBITDA and Adjusted EBITDA, Adjusted for Divestitures in this press release because it believes these measures provide investors and other users of the Company’s financial statements with additional information about how the Company’s management assesses its results of operations.

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Net income (loss)

$

(25,941

)

$

(30,575

)

$

(124,428

)

$

(57,780

)

Interest expense, net

31,926

30,458

62,857

57,988

Provision for (benefit from) income taxes

(454

)

(245

)

(88

)

456

Depreciation and amortization

17,142

20,586

35,403

42,706

EBITDA

22,673

20,224

(26,256

)

43,370

Legal, professional and settlement costs

5,417

3,934

8,830

4,469

Impairment of long-lived assets and goodwill

—

12,900

39,760

16,200

Loss (gain) on sale of hospitals, net

307

(4,321

)

8,122

(5,191

)

Loss on closure of hospitals, net

3,338

—

17,084

—

Transition of transition services agreements

520

—

1,237

—

Transaction costs related to the Spin-off

—

—

—

31

Post-spin headcount reductions and executive severance

4,068

1,693

5,966

1,693

Adjusted EBITDA

36,323

34,430

54,743

60,572

Negative EBITDA of divested hospitals

3,324

8,998

11,701

13,767

Adjusted EBITDA, Adjusted for Divestitures

$

39,647

$

43,428

$

66,444

$

74,339

(d)

The following table reconciles net income (loss) attributable to Quorum Health Corporation, as reported and on a per share basis, with the adjustments described herein:

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

(per share - basic and diluted)

(per share - basic and diluted)

Earnings (loss) per share attributable to Quorum Health Corporation stockholders, as reported

$

(0.92

)

$

(1.09

)

$

(4.37

)

$

(2.08

)

Adjustments:

Legal, professional and settlement costs

0.18

0.14

0.31

0.16

Impairment of long-lived assets and goodwill

—

0.45

1.38

0.58

Loss (gain) on sale of hospitals, net

0.01

(0.15

)

0.28

(0.19

)

Loss on closure of hospitals, net

0.11

—

0.59

—

Transition of transition services agreements

0.02

—

0.04

—

Transaction costs related to the Spin-off

—

—

—

—

Post-spin headcount reductions and executive severance

0.14

—

0.21

—

Net operating losses of divested hospitals

0.11

0.32

0.41

0.67

Earnings (loss) per share attributable to Quorum Health Corporation stockholders, excluding adjustments

$

(0.35

)

$

(0.33

)

$

(1.15

)

$

(0.86

)

(e)

Licensed beds are the number of beds for which the appropriate state agency licenses a hospital, regardless of whether the beds are actually available for patient use.

(f)

Admissions represent the number of patients admitted for inpatient services.

(g)

Adjusted admissions are computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.

(h)

Total surgeries represent the number of inpatient and outpatient surgeries.

(i)

Emergency room visits represent the number of patients registered and treated in the Company’s emergency rooms.

(j)

Medicare case mix index is a relative value assigned to a diagnosis-related group of patients that is used in determining the allocation of resources necessary to treat the patients in that group. Medicare case mix index is calculated as the average case mix index for all Medicare admissions during the period.

(k)

Same-facility financial and operating data excludes hospitals that were sold prior to and as of the end of the current reporting period. Same-facility operating results have been adjusted to exclude the operating results of Sandhills Regional Medical Center, Barrow Regional Medical Center, Cherokee Medical Center, Trinity Hospital of Augusta, Lock Haven Hospital, Sunbury Community Hospital, L.V. Stabler Memorial Hospital, Affinity Medical Center, Vista Medical Center West and Clearview Regional Medical Center which were sold or closed on December 1, 2016, December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, September 30, 2017, October 31, 2017, February 11, 2018, March 1, 2018 and March 31, 2018, respectively.

•

general economic and business conditions, both nationally and in the regions in which the Company operates;

•

risks associated with the Company’s substantial indebtedness, leverage and debt service obligations, including its ability to comply with its debt covenants, including its senior credit facility, as amended;

•

the Company’s ability to successfully make acquisitions or complete divestitures and the timing thereof, its ability to complete any such acquisitions or divestitures on desired terms or at all, and its ability to realize the intended benefits from any such acquisitions or divestitures;

•

changes in reimbursement methodologies and rates paid by federal or state healthcare programs, including Medicare and Medicaid, or commercial payors, and the timeliness of reimbursement payments, including delays in certain states in which the Company operates;

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the extent to which regulatory and economic changes occur in Illinois, where a material portion of the Company’s revenues are concentrated;

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demographic changes;

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the impact of changes made to the Affordable Care Act, the potential for repeal or additional changes to the Affordable Care Act, its implementation or its interpretation, as well as changes in other federal, state or local laws or regulations affecting the healthcare industry;

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increases in the amount and risk of collectability of patient accounts receivable, including lower collectability levels which may result from, among other things, self-pay growth and difficulties in collecting payments for which patients are responsible, including co-pays and deductibles;

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competition;

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changes in medical or other technology;

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any potential impairments in the carrying values of long-lived assets and goodwill or the shortening of the useful lives of long-lived assets;

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the costs associated with terminating the transition services agreements with Community Health Systems, Inc., including the related arbitration proceeding, as well as the additional costs and risks associated with any operational problems, delays in collections from payors, and errors and control issues during the termination and transition process, and the Company’s ability to realize the intended benefits from terminating the transition services agreements;

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the impact of certain outsourcing functions, and the ability of CHS, as provider of the Company’s billing and collection services pursuant to the transition services agreements, to timely and appropriately bill and collect;

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the Company’s ability to manage effectively its arrangements with third-party vendors for key non-clinical business functions and services;

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the Company’s ability to achieve operating and financial targets and to control the costs of providing services if patient volumes are lower than expected;

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the Company’s ability to achieve and realize the operational and financial benefits expected from its margin improvement program;

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the effects related to outbreaks of infectious diseases;

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the Company’s ability to attract and retain, at reasonable employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers;

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the impact of seasonal or severe weather conditions or earthquakes;

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increases in wages as a result of inflation or competition for highly technical positions and rising medical supply and drug costs due to market pressure from pharmaceutical companies and new product releases;

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the Company’s ongoing ability to demonstrate meaningful use of certified EHR technology, including meeting interoperability objectives, and avoid related penalties and recognize income for the related Medicare or Medicaid incentive payments, to the extent such payments have not expired;

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the efforts of healthcare insurers, providers, large employer groups and others to contain healthcare costs, including the trend toward treatment of patients in less acute or specialty healthcare settings and the increased emphasis on value-based purchasing;

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the failure to comply with governmental regulations;

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the Company’s ability, where appropriate, to enter into, maintain and comply with provider arrangements with payors and the terms of these arrangements, which may be impacted by the increasing consolidation of health insurers and managed care companies and vertical integration efforts involving payors and healthcare providers;

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the potential adverse impact of known and unknown government investigations, internal investigations, audits, and federal and state false claims act litigation and other legal proceedings, including the shareholder and creditor litigations against the Company and certain of its officers and threats of litigation, as well as the significant costs and attention from management required to address such matters;

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liabilities and other claims asserted against the Company, including self-insured malpractice claims;

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the impact of cyber-attacks or security breaches, including, but not limited to, the compromise of the Company’s facilities and confidential patient data, potential harm to patients, remediation and other expenses, potential liability under HIPAA and consumer protection laws, federal and state governmental inquiries, and damage to the Company’s reputation;

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the Company’s ability to utilize its income tax loss carryforwards and risks associated with the Tax Cuts and Jobs Act of 2017;

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the Company’s ability to maintain certain accreditations at its existing facilities and any future facilities it may acquire;

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the success and long-term viability of healthcare insurance exchanges and potential changes to the beneficiary enrollment process;

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the extent to which states support or implement changes to Medicaid programs, utilize healthcare insurance exchanges or alter the provision of healthcare to state residents through regulation or otherwise;

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the timing and amount of cash flows related to the California HQAF Program, as well as the potential for retroactive adjustments for prior year payments;

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the effects related to the continued implementation of the sequestration spending reductions and the potential for future deficit reduction legislation;

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changes in U.S. generally accepted accounting principles, including the impacts of adopting newly issued accounting standards;

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the availability and terms of capital to fund acquisitions, replacement facilities or other capital expenditures;

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the Company’s ability to obtain adequate levels of professional and general liability and workers’ compensation liability insurance; and

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the other risk factors set forth in the Company’s other public filings with the Securities and Exchange Commission.