NONOPERATING ITEMS: MidMichigan Health s investment income of $3.3 million increased compared to $2.6 million a year ago.

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1 4000 Wellness Drive Midland, Michigan Phone (989) Subject: Continuing Disclosure Filing for MidMichigan Health Period Ended: Nine-month Period Ended March 31, 2015 Filed by: Francine M. Padgett, SVP and Treasurer Dated: May 1, 2015 Enclosed please find the consolidated financial and statistical report for MidMichigan Health, which includes the MidMichigan Obligated Group for the third quarter, ended March 31, Third Quarter: Jan. 1, 2015 Mar. 31, 2015 compared to Jan. 1, 2014 Mar 31, 2014 ACTIVITY: Total admissions for the system were essentially flat (down 16 admissions). Outpatient observations were up 11.9%. Total case mix decreased for the quarter. Total hospital outpatient visits increased by approximately 5.0%. TOTAL OPERATING REVENUE: Gross patient service revenue increased 11.0% or $33.1 million over the prior year, driven primarily by outpatient ancillary revenue which increased $21.4 million compared to a year ago. However, net patient service revenue only increased 6.2% driven by an increase in contractual adjustments of $28.2 million (primarily the result of volume) offset by a decrease of $3.6 million in the provision for uncompensated care due to the expansion of the Medicaid program. EXPENSE MANAGEMENT: Expenses increased by 4.6%; the increase resulted from an increase in salaries, benefits and supplies. The increase in salaries and benefits is due to the increase in volume along with a $1.9 million accrual for the employee incentive plan (EIP) and higher health expense due to higher claims experience. The increase in supplies is being driven by an increase in patient-related supplies and pharmaceuticals due to the increase in activity. Offsetting those increases is a decrease in depreciation. The decrease in depreciation is due to the timing of when projects are placed into service. FINANCIAL RESULTS: The operating performance was above the prior year but below the budgeted performance for the quarter. The income from operations for the quarter at $0.6 million increased compared to the prior year loss of $1.2 million. MidMichigan Health s Operating EBIDA (Earnings before Interest, Depreciation and Amortization) remained strong at $12.0 million compared to the prior year of $11.3 million. NONOPERATING ITEMS: MidMichigan Health s investment income of $3.3 million increased compared to $2.6 million a year ago. Year-To-Date: March 31, 2015 compared to the Annual Financial Plan (Budget) ACTIVITY: Total admissions for the system were down 2.5% or 354 admissions driven by declines in our rural medical centers. Total outpatient visits increased 2.1%. The areas with increased visits included emergency room visits, outpatient surgery visits and other outpatient departments offset by a decrease in observations. TOTAL OPERATING REVENUE: As expected, given the increased activity, outpatient revenue increased. Although inpatient ancillary revenue decreased, net patient service revenue increased 1.9%. The increase reflects increased gross revenue ($6.9 million) and decreased uncompensated care ($6.2 million) due to the expansion of the Medicaid program offset by increased provisions for contractual adjustments ($4.9 million). Other operating revenue increased $2.9 million primarily due to a gain of $1.3 from the dissolution of the Saginaw Radiation Oncology joint venture along with $0.8 million in meaningful use dollars not budgeted until later in the year. As a result, total operating revenue was $11.1 million over budget.

2 Continuing Disclosure MidMichigan Health Nine Month Period Ended March 31, 2015 EXPENSE MANAGEMENT: Expenses were 1.3% over budget or $5.6 million. The increase resulted primarily from salaries and benefits, insurance and supplies. Included in salaries is $4.2 million of unbudgeted EIP accruals and $2.5 million related to higher benefit costs. In addition, increased salaries and benefits costs reflect the staffing adjustments made for activity levels. The increase in supplies is being driven by an increase in patient-related supplies and pharmaceuticals due to an increase in activity level. The increase in insurance is primarily due to timing. Partially offsetting those increases was a decrease in fees, depreciation and purchased services. The decrease in fees is due to the collection of a $3.2 million receivable related to a strategic investment. The decrease in depreciation is due to the timing of when projects are placed into service. The decrease in purchased services is due to expense management initiatives put into place to reduce discretionary expenses. As a result, maintenance contracts, software maintenance contracts and education/seminars decreased. FINANCIAL RESULTS: These factors resulted in income from operations of $12.9 million compared to the budgeted operating income of $7.3 million. The operating margin of 2.8% was above the budgeted margin of 1.6%. On a recurring basis, the operating margin of 1.8% remains above the budgeted margin of $1.6%. Year-To-Date: Nine-Month Period Ended March 31, 2015 compared to March 31, 2014 ACTIVITY: Total admissions for the system were down 2.2% or 316 admissions. Activity for last year only reflects two quarters of the changes due to the two-midnight rule, since it was not effective until October 1, Outpatient observations were up 11.3%. Both Medicare and total case mix increased for the year, reflecting more acute patients. Total hospital outpatient visits increased by approximately 3.2%, driven by an increase in most outpatient areas. In addition, physician visits increased 6.2% and total urgent care visits increased 32.7% due to the addition of two new urgent cares in fiscal TOTAL OPERATING REVENUE: Net patient service revenue increased 6.7%, or $27.6 million, driven primarily by outpatient visits and revenue. Other operating revenue decreased $1.2 million, primarily due to lower incentive payments. EXPENSE MANAGEMENT: Expenses increased by 2.3%, driven primarily by an increase in salaries, benefits, and supplies. The increase in salaries and benefits is related to merit increases and the accrual in anticipation of meeting metrics for an employee incentive. The increase in supplies related to an increase in patient-related supplies. Partially offsetting those increases is a decrease in fees and depreciation. Fees decreased due to the collection of a $3.2 million receivable related to a strategic investment. Depreciation decreased due to projects being fully depreciated and timing of new projects placed in service. FINANCIAL RESULTS: Operating performance has improved and MidMichigan Health recognized a $12.9 million income from operations compared to the prior year loss of $3.3 million. MidMichigan Health s Operating EBIDA (Earnings before Interest, Depreciation and Amortization) continues to remain strong at $49.0 million compared to $34.8 million a year ago. NONOPERATING ITEMS: MidMichigan Health s investment income of $11.0 million decreased compared to $21.8 million a year ago, mainly due to the sale of $27 million of investments in the first quarter of the prior year for the retirement of $40.6 million of outstanding Michigan State Hospital Finance Authority Revenue Bonds Series 1997 and As a result of the asset sale, MidMichigan Health had approximately $10 million of realized gains due to recapturing other-than-temporary impairment. Also included in nonoperating items for Fiscal 2015 is a $27.2 million loss from extinguishment of debt. By taking advantage of the refinancing opportunity, MidMichigan Health has lowered its cost of capital from approximately 5% to 4%. MidMichigan Health also experienced unrealized losses of approximately $2.8 million compared to a gain of $24.7 million a year ago due to the decline in the equity markets.

3 Continuing Disclosure MidMichigan Health Nine Month Period Ended March 31, 2015 Required Actions: MidMichigan Health has continued to focus on its operating margin and recurring run rate. An update to its strategic plan is in process and the Fiscal 2016 priorities are currently being finalized. If you have any questions on any of this information, please do not hesitate to contact me at (989) Enclosures: Consolidated Financial and Statistical Report

4 CONSOLIDATED FINANCIAL AND STATISTICAL REPORT March 31, 2015 QUARTERLY BOND STATEMENTS

5 CONSOLIDATED STATISTICAL REPORT For the Period Ended March 31, 2015 Current Quarter Year-to-Date % % % % Actual Budget Change Prior Year Change Actual Budget Change Prior Year Change INPATIENT - HOSPITALS 4,036 4, % 4, % Admissions - Acute 12,426 12, % 12, % % % Admissions - Rehabilitation % % % % Admissions - Mental Health 1,001 1, % % 4,463 4, % 4, % Total Admissions 13,743 14, % 14, % 14,762 14, % 14, % Patient Days - Acute 43,790 44, % 44, % 1,317 1, % 1, % Patient Days - Rehabilitation 3,817 4, % 3, % 2,076 1, % 1, % Patient Days - Mental Health 6,306 5, % 5, % 18,155 18, % 17, % Total Patient Days 53,913 54, % 54, % % % Length of Stay - Acute % % % % Length of Stay - Rehabilitation % % % % Length of Stay - Mental Health % % % % Total Length of Stay % % % % Midland Casemix - Medicare % % % % Gratiot, Clare, Gladwin Casemix - Medicare % % % % Midland Casemix - Total % % % % Gratiot, Clare, Gladwin Casemix - Total % % System Payor Mix (% Revenue) 49.9% 51.4% -2.8% 50.0% -0.1% Medicare 50.2% 51.4% -2.3% 51.3% -2.1% 18.5% 18.4% 0.4% 19.2% -4.0% Blue Cross 18.4% 18.4% 0.2% 18.7% -1.2% 15.6% 11.6% 34.5% 12.0% 29.6% Medicaid 15.1% 11.6% 30.0% 11.8% 27.3% 16.0% 18.6% -14.1% 18.7% -14.6% Other 16.2% 18.6% -12.6% 18.2% -10.7% OUTPATIENT 16,672 16, % 15, % Emergency Room Visits 52,365 50, % 49, % 9,948 9, % 8, % Outpatient Surgery Visits 29,704 28, % 28, % 1,109 1, % % Observations 3,147 3, % 2, % 107, , % 102, % Other Outpatient Visits 328, , % 320, % 134, , % 128, % Total Hospital Outpatient Visits 413, , % 400, % 131, , % 118, % Total Physician Visits 380, , % 358, % 14,654 11, % 10, % Midland 42,836 35, % 28, % 5,041 4, % 4, % Gratiot 14,718 13, % 13, % 4,360 4, % 4, % Clare 13,588 12, % 12, % 24,055 20, % 18, % Total Urgent Care Visits 71,142 61, % 53, % 21,316 22, % 21, % Total Home Care Visits 61,228 66, % 64, % CONTINUING & EXTENDED CARE 14,110 15, % 13, % Patient Days 44,337 47, % 42, % 77% 85% -9.8% 76% 1.4% % Occupancy 81% 87% -7.0% 78% 4.2% FTEs 3, , % 3, % Total Worked FTE's 3, , % 3, % 3, , % 3, % Total Paid FTE's 3, , % 3, % Page 1

6 NET INCOME - ACTUAL VS BUDGET (000s) For the Period Ended March 31, 2015 Current Quarter Year-to-Date % % % % Actual Budget Change Prior Year Change Actual Budget Change Prior Year Change OPERATING REVENUE: $29,977 $30, % $27, % Routine Care $90,627 $92, % $83, % 76,821 81, % 73, % Inpatient Ancillary 235, , % 230, % 190, , % 169, % Outpatient Ancillary 582, , % 506, % 37,086 37, % 31, % Physician Office 109, , % 96, % 334, , % 301, % Total Patient Service Revenue 1,017,585 1,010, % 917, % (183,897) (183,097) -0.4% (155,707) -18.1% Provision for Contractual Adjustments (557,525) (552,621) -0.9% (476,239) -17.1% (6,247) (9,317) 33.0% (9,805) 36.3% Provision for Uncompensated Services (21,736) (27,945) 22.2% (30,136) 27.9% 144, , % 135, % Net Patient Service Revenue 438, , % 410, % 5,257 4, % 5, % Other Operating Revenue 19,310 16, % 20, % 149, , % 141, % TOTAL OPERATING REVENUE 457, , % 431, % OPERATING EXPENSES: 65,304 63, % 61, % Salaries 196, , % 188, % 18,471 16, % 16, % Benefits 51,386 49, % 47, % 24,301 23, % 22, % Supplies 74,644 73, % 69, % 14,339 14, % 13, % Purchased Services and Other 42,284 43, % 41, % 11,677 11, % 12, % Fees 32,678 35, % 37, % 9,401 10, % 10, % Depreciation & Amortization 29,204 30, % 30, % 2,089 2, % 2, % Interest 6,848 7, % 7, % 2,482 2, % 2, % Utilities 7,814 7, % 7, % % 1, % Insurance 3,594 1, % 4, % 149, , % 142, % TOTAL OPERATING EXPENSES 444, , % 434, % 551 1, % (1,159) 147.5% INCOME (LOSS) FROM OPERATIONS 12,906 7, % (3,286) 492.8% NONOPERATING ITEMS: 3,327 2, % 2, % Nonoperating Investment Income 11,022 8, % 21, % % 0 0.0% Loss from early extinguishment of debt (27,188) 0 0.0% (862) - 3,327 2, % 2, % Total Nonoperating Items (16,166) 8, % 20, % 3,878 3, % 1, % EXCESS OF REVENUE OVER EXPENSES (3,260) 16, % 17, % % % Less: Noncontrolling Interest in Affiliate % % 3,878 3, % 1, % EXCESS OF REVENUE OVER EXPENSES - NET (3,277) 16, % 17, % % 1, % Discontinued Operations - Gain % 1, % 3,878 3, % 2, % NET INCOME BEFORE MARKET ADJUSTMENTS (2,783) 16, % 18, % 8, % 5, % Unrealized Investment Return (2,788) 0 0.0% 24, % $12,163 $3, % $8, % INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS ($5,571) $16, % $43, % 0.4% 0.8% -0.8% Operating Margin 2.8% 1.6% -0.8% - >1000% Note: The total investment return is shown in the financial statements in two segments: (1) investment income which consists of the real return; earned income and realized gain (loss), unrealized gain (loss) for fair value investments, and the unrealized gain (loss) for alternative investments held in the MidMichigan Health portfolio, and (2) unrealized investment return, which consists of the unrealized gain (loss) on investments not considered to be alternative investments. Page 2

7 BALANCE SHEET (000s) March 31, December 31, June 30, March 31, December 31, June 30, ASSETS LIABILITIES AND NET ASSETS CURRENT ASSETS: CURRENT LIABILITIES: Cash and short-term investments $14,235 $11,817 $11,113 Accounts payable & accrued expenses $27,729 $24,294 $21,700 Trading securities 11,557 11,879 12,826 Accrued salaries, wages, & benefits 33,619 28,533 27,246 Patient accounts receivable 159, , ,828 Current portion of long-term debt 1,705 1,705 3,258 Less: Allowance for contractual adjustments (78,775) (79,002) (72,470) Amount due to third-party payors 5,749 6,521 9,501 80,771 82,507 86,358 Current portion of self-insurance & other 2,260 2,008 1,951 Less: Allowance for doubtful accounts (16,487) (17,923) (23,012) Net accounts receivable 64,284 64,584 63,346 Total current liabilities 71,062 63,061 63,656 Amount due from third-party payors 7,023 10,662 8,926 Inventories 4,447 4,127 4,005 Prepaid expenses and other 6,354 5,919 6,731 Current portion of assets whose use is limited 9,440 10,063 9,154 DEFERRED COMPENSATION, Total current assets 117, , ,101 SELF-INSURANCE AND OTHER ACCRUED LIABILITIES 59,687 58,080 55,728 INVESTMENTS 162, , ,579 PENSION OBLIGATION 25,415 25,984 25,021 INVESTMENTS WHOSE USE IS LIMITED BY: Board-designated investments for: LONG-TERM DEBT OBLIGATIONS 197, , ,860 Replacement and improvement of property and equipment 376, , ,352 Deferred compensation, Total Liabilities 354, , ,265 self-insurance and other 38,202 36,301 37,119 Donor Restricted for: Specific purposes 22,529 22,230 20,341 Permanent endowment funds 13,912 13,429 13,361 NET ASSETS: Total assets whose use is limited/restricted 451, , ,173 Unrestricted 651, , ,887 Noncontrolling interest in affiliates INVESTMENT IN JOINT VENTURES 5,784 6,250 6,813 Total Unrestricted 651, , ,967 PROPERTY AND EQUIPMENT, NET 266, , ,888 Temporarily restricted by donors 22,529 22,230 20,341 RENTAL BUILDINGS, NET 21,251 20,565 21,197 Permanently restricted endowment funds 13,912 13,429 13,361 DEFERRED CHARGES, DEBT ISSUE COSTS & OTHER 16,899 16,622 21,183 Total net assets 687, , ,669 TOTAL $1,042,036 $1,020,570 $1,011,934 TOTAL $1,042,036 $1,020,570 $1,011,934 Page 3

8 STATEMENT OF CHANGES IN CASH AND CASH EQUIVALENTS* (000s) For the Period Ended March 31, 2015 Current Quarter Year-to-Date CASH FLOWS FROM OPERATING ACTIVITIES: Change in net unrestricted assets $12,282 ($5,399) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 9,401 29,204 Restricted contributions and investments received (783) (2,739) Distributions to noncontrolling interest 0 (97) Equity earning in joint ventures, net of dividends 466 1,029 Loss on extinguishment of debt 0 27,188 Minimum pension and other postretirement liability adjustments 0 0 Changes in: Patient Accounts Receivable 301 (938) Estimated third-party payor settlements 2,868 (1,849) Prepaid expenses and other (133) (352) Accounts payable and accrued expenses 8,521 12,402 Liability for self-insurance, deferred compensation and other accrued liabilities (289) 4,848 Net cash provided by (used in) operating activities 32,634 63,297 CASH FLOWS FROM INVESTING ACTIVITIES: Property and Equipment Additions (8,617) (23,474) Net cash used in investing activities (8,617) (23,474) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 0 189,651 Refunding of long-term debt 0 (188,848) Payment of long-term debt (429) (2,832) Proceeds from restricted contributions 783 2,739 Debt retirement, premiums, debt issuance costs and other ** (202) (1,206) Net cash used in financing activities 152 (496) INCREASE IN CASH AND CASH EQUIVALENTS 24,169 39,327 CASH AND CASH EQUIVALENTS Beginning of period 529, ,045 End of period $553,372 $553,372 *Cash and short-term investments $14,235 Investments 162,640 Board-designated investments for: Replacement and improvement of property and equipment at cost 376,497 End of Period Cash and Cash Equivalents $553,372 ** Other is primarily post retirement and long term receivables Page 4

9 SUPPLEMENTAL INFORMATION FOR RATIO ANALYSIS (000s) For the Period Ended March 31, 2015 Current Year Prior Year Total Investment Return YTD YTD Interest and Dividends - net $7,624 $3,163 Realized Gains 2,195 16,669 Unrealized gains (losses) from investments accounted for using the fair value option and the equity method 1,417 2,847 Unrealized investment return (2,788) 24,676 Total Investment return $8,448 $47,355 Reported as: Other revenue $214 $914 Nonoperating income 11,022 21,765 Change in unrealized (2,788) 24,676 Total Investment return $8,448 $47,355 Unrestricted Net Assets March 31, June 30, Beginning balance July 1 $656,967 $594,495 Net increase in unrestricted net assets (excluding gain on discontinued operations) (6,065) 57,333 Noncontrolling interest Unrealized investment return in noncontrolling interest 0 0 Net assets released from restriction for capital purchases Distributions to noncontrolling interest (97) (750) Gain on Discontinued Operations (including noncontrolling interest) 494 1,350 Minimum pension and other postretirement adjustments 0 4,041 Ending balance $651,471 $656,967 Ratios March 31, June 30, Cash and short-term investments $14,235 $11,113 Investments 162, ,579 Board designated investments for: Replacements and improvement of property and equipment 376, ,352 Less: Current portion of long-term debt obligations (1,705) (3,258) Total Cash on Hand $551,667 $510,786 Operating expenses year-to-date $444,728 $585,011 Less: depreciation and amortization (29,204) (41,808) Total Operating Expenses $415,524 $543,203 Number of Days in Period DAYS CASH ON HAND (including Market Valuation) Maximum Annual Debt Service $15,535 $15,903 CUSHION RATIO Excess of revenue over expenses ($3,277) $19,640 Increases: Depreciation and amortization 29,204 41,808 Interest 6,848 10,098 Change in unrealized values for investments accounted for using the equity method and fair value option, including impairment (1,417) (5,354) Loss on early extinguishment of debt 27,188 Decreases: Restricted income from irrevocable deposits 0 0 Income available for debt service 58,546 66,192 Income available for debt service (Annualized for Current Year YTD) $77,990 $66,192 DEBT SERVICE COVERAGE RATIO Current portion of long-term debt $1,705 $3,258 Long-term debt obligations, net of current portion 197, ,860 Total Long-Term Obligations $199,665 $180,118 Total Unrestricted Net Assets (exluding noncontrolling interest) $651,471 $656,887 TOTAL DEBT TO CAPITALIZATION 23.5% 21.5% The above schedule has been prepared in compliance with the Master Indenture dated as of December 1, 2014 between MidMichigan Health and The Bank of New York Mellon Trust Company, N.A. Page 5