Franklin, Tenn.-based Community Health Systems’ credit rating was upgraded to “Caa1” from “Caa2” by Moody’s.
The upgrade reflects the publicly traded for-profit system’s material deleveraging in recent years through substantial debt paydown, while maintaining revenue and EBITDA at nearly flat level, Moody’s said in a July 27 report.
So far in 2026, CHS has divested its interest in nine hospitals for about $1.2 billion. CHS’ moves continue a divestiture strategy that began in the late 2010s, with the system pivoting toward “building networks of care — markets where we could leverage our scale and footprint, either within a state or a defined region,” CEO Kevin Hammons previously told Becker’s.
Deleveraging has been the throughline of CHS’ strategy. The system’s long-term debt fell to $9.55 billion at the end of the second quarter of 2026, down from $10.38 billion at the end of 2025.
Moody’s expects CHS will continue to execute its business optimization strategy, according to the report.
The Caa1 rating reflects the system’s high financial leverage, execution risks associated with ongoing divestitures, and challenges in generating positive free cash flow, according to the report.
“While the company has reduced its cash burn in recent years, and generated positive free cash flow in fiscal 2025, the transition to a sustained positive free cash flow will require reduced working capital volatility and further improvement in profitability of the company’s core business,” Moody’s said in the report.
CHS has a stable outlook at its upgraded rating.
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