DISCLOSURE REPORT DATED MAY 26, 2017 THE NEW YORK AND PRESBYTERIAN HOSPITAL FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2016

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1 DISCLOSURE REPORT DATED MAY 26, 2017 THE NEW YORK AND PRESBYTERIAN HOSPITAL FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2016 Table of Contents INTRODUCTION... 1 General... 1 Hospital Campuses... 2 Debt Structure... 3 FINANCIAL AND OPERATING INFORMATION... 5 Utilization... 5 Sources of Patient Service Revenue... 6 Summary Statements of Operations and Financial Position... 7 Liquidity Long-Term Debt Service Coverage Capitalization Management s Discussion and Analysis of Utilization Management s Discussion and Analysis of Recent Financial Performance Outstanding Long-Term Indebtedness Investments Philanthropy Fund, Inc Capital Expenditures Royal Charter Properties Appendix A i-

2 New York-Presbyterian Organizational Structure New York-Presbyterian Foundation, Inc. The New York and Presbyterian Hospital New York- Presbyterian Fund, Inc. Royal Charter Properties, Inc. Royal Charter Properties-East, Inc. Royal Charter Properties- Westchester, Inc. New York-Presbyterian Healthcare System, Inc. NYP Community Services, Inc. NYP Community Programs, Inc. The Rogosin Institute New York- Presbyterian / Lawrence Hospital Obligated Group 1 New York- Presbyterian / Hudson Valley Hospital New York- Presbyterian / Queens New York- Presbyterian / Brooklyn Methodist The Hospital for Special Surgery The New York Gracie Square Hospital The Silvercrest Center for Nursing and Rehabilitation Supporting Corporations, Non-Obligated Group 2 The New York Community Hospital of Brooklyn Hospital Subsidiary, Non-Obligated Group 3 Other Related Corporations, Non-Obligated Group 4 Corporate Members, Non-Obligated Group 5 Footnotes on next page -ii-

3 1. In connection with the issuance by The New York and Presbyterian Hospital (the Hospital ) of its Series 2015 Bonds in February 2015, the Hospital formed an Obligated Group under and as defined in its Master Trust Indenture. Currently, the Hospital is the sole member of the Obligated Group. For a discussion of the Master Trust Indenture, the Obligated Group and the debt covered thereby, see Introduction Debt Structure The MTI Indebtedness on page 4 of this Disclosure Report. 2. For a discussion of the Supporting Corporations, see the third paragraph under the heading Introduction General on page 2 of this Disclosure Report. 3. The Hospital subsidiaries are those entities under the control of the Hospital or one of its direct subsidiaries. These entities are part of the Hospital s consolidated group that is reported in the consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles. Entities included in the Hospital s consolidated financial statements, other than the Hospital, are not legally obligated on the Hospital s indebtedness. 4. These corporations coordinate membership in the Health Care System (as hereinafter defined). For additional details, see the third paragraph under the heading Introduction - General on page 2 of this Disclosure Report. 5. For a discussion of the Corporate Members, see the third paragraph under the heading Introduction General on page 2 of this Disclosure Report. Note: The Hospital is the only entity that is obligated with respect to repayment of its indebtedness, including its Series 2015 Bonds and its Series 2016 Bonds. None of the assets or revenue of any of the other entities described above is committed to the repayment of the Hospital s indebtedness. -iii-

4 FORWARD-LOOKING STATEMENTS Certain statements in this disclosure report that relate to the Hospital are forward-looking statements that are based on the beliefs of, and assumptions made by, the management of the Hospital. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Hospital to be materially different from any expected future results or performance. * * * * * PREVIOUSLY REPORTED INFORMATION WITH RESPECT TO PRIOR PERIODS Certain financial information and utilization data set forth herein with respect to past periods may differ from what the Hospital has previously reported in earlier disclosure documents. This is generally due to changes in accounting standards and related guidance, or the application of relevant accounting standards, that require a reclassification or restatement of certain items and to adjustments in utilization data that occur in the normal course of patient care or as services are billed and coded. * * * * * The information contained in this disclosure report may include statistics and other data relating to the healthcare industry in the United States that have been derived from third party sources. Such statistics and data are not necessarily reflective of current or future industry and market conditions. While the Hospital has no reason to question the accuracy of such statistics and data, such statistics and data have not been independently verified by the Hospital. INTRODUCTION General The New York and Presbyterian Hospital (the Hospital ), a New York not-for-profit corporation created as a result of the January 1998 merger of The Society of The New York Hospital ( New York Hospital ) and The Presbyterian Hospital in the City of New York ( Presbyterian Hospital ), operates at six campuses in Manhattan and Westchester County, New York. The Hospital serves as the academic and quaternary care hub of a network of health care providers (the Health Care System ), which, as of May 1, 2017, included 8 acute care hospitals, 2 long-term care facilities, 2 ambulatory sites and 2 specialty institutions, located in New York and Connecticut. Over the years the Hospital has developed its relationships with the other members of the Health Care System as part of its strategic goal of providing high quality, integrated care throughout the tri-state New York metropolitan area (the Metropolitan Area ). One of the country s largest academic medical centers, the Hospital ranked #6 in the U.S News and World Report annual ranking of the best hospitals in the United States, and was the top-ranked hospital in the Metropolitan Area. The Hospital has developed highly specific, patient-centered models of care to treat its diverse patient populations. The Hospital is the primary clinical teaching facility for two of the country s leading medical colleges: The Joan and Sanford I. Weill Medical College of Cornell University ( Weill Cornell Medical School ) and the Columbia University College of Physicians and Surgeons ( Columbia University Medical School and, together with Weill Cornell Medical School, the Medical Schools ). All members of the Attending Medical Staff of the Hospital hold faculty appointments at one of the Medical Schools. -1-

5 New York Presbyterian Foundation, Inc. ( NYPFI ) is an affiliate that is linked to the Hospital through the Hospital s Board of Trustees. The Hospital also has several affiliated entities that support the Hospital through fundraising and real estate holdings. These affiliated entities ( Supporting Corporations ) include: (i) New York-Presbyterian Fund, Inc. ( Fund, Inc. ), which solicits, receives, invests and administers philanthropic funds for the Hospital and other charitable organizations approved by the Board of Directors of Fund, Inc. and (ii) three real estate holding companies: Royal Charter Properties, Inc., Royal Charter Properties East, Inc., and Royal Charter Properties Westchester, Inc. (collectively, the RCP Corporations ). Another affiliated entity, the New York-Presbyterian Healthcare System, Inc. ( NYPHSI ), serves as the corporate link to a number of the hospitals and other entities that are referred to as Corporate Members (as further defined below) of the Regional Hospital Network. NYP Community Programs, Inc. ( Community Programs ), a subsidiary of the Hospital, serves as the parent entity of the Hospital s indirect hospital subsidiaries, NYP/Brooklyn Methodist, NYP/Queens, NYP/Hudson Valley and NYP/Lawrence Hospital, which are collectively referred to herein as the Regional Hospitals. Hospital Campuses The Hospital owns and operates one of the oldest hospitals in the nation. It has a history of over 200 years of providing medical care in the Metropolitan Area, with five of the Hospital s six campuses having roots dating back more than 120 years. Weill Cornell Campus The Weill Cornell Campus now occupies the city blocks bounded by East 68 th Street to East 71 st Street and from York Avenue to the East River, together with various buildings in the area. Portions of the buildings that comprise the Weill Cornell Campus are owned and/or occupied by Weill Cornell Medical School. The Hospital has 862 certified inpatient beds at its facilities on the Weill Cornell Campus. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School. Westchester Division The Westchester Division, which has 270 certified beds, provides inpatient and outpatient psychiatric and behavioral health services. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School. Lower Manhattan Hospital The Hospital s newest campus, NewYork-Presbyterian Lower Manhattan Hospital ( Lower Manhattan Hospital ), is located at 170 William Street, Manhattan, and is the only acute care facility in Manhattan below 14 th Street. It has 180 certified beds. Lower Manhattan Hospital became part of the Hospital in July 2013 when New York Downtown Hospital, then a separate member of the Health Care System, was merged into the Hospital. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School. Columbia Irving Campus The Columbia Irving Campus now occupies the city blocks bounded by West 165 th Street to West 168 th Street and from Broadway to Riverside Drive, together with various other buildings in the area. Portions of the buildings that comprise the Columbia Irving Campus are owned and/or occupied by Columbia University Medical School. The Hospital has 738 certified beds at its facilities on this campus. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School. -2-

6 Morgan Stanley Children s Hospital The Morgan Stanley Children s Hospital of NewYork-Presbyterian ( MSCHONY ) is a pediatric acute care and ancillary services facility with 269 certified beds, and is located on a site contiguous with the Columbia Irving Campus. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School. Allen Hospital The Allen Hospital, which has 196 certified beds and is located at Broadway and the Harlem River in the Inwood section of Manhattan, opened in 1988 under the sponsorship of Presbyterian Hospital and offers acute care to residents of its service area in a community-based setting. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School. Debt Structure The Hospital s long-term indebtedness can be categorized into four groups: (1) the FHA-Insured Indebtedness, (2) the Lower Manhattan Indebtedness, (3) the Master Trust Indenture (MTI) Indebtedness and (4) Other Indebtedness. As discussed below, the FHA-Insured Indebtedness and the Lower Manhattan Indebtedness are secured by mortgages on certain of the Hospital s facilities and pledges of revenues and accounts. The MTI Indebtedness is unsecured. The FHA-Insured Indebtedness The Hospital s FHA-Insured Indebtedness is secured by mortgages on the Weill Cornell Campus, the Columbia Irving Campus, Morgan Stanley Children s Hospital, Allen Hospital and the Westchester Division (the FHA-Insured Mortgages ), and a pledge of revenues and accounts of the Hospital. Under the loan documents for the FHA-Insured Mortgages (the FHA Loan Documents ), the Hospital is required to maintain certain debt service funds, including mortgage reserve funds. In addition, the Hospital is required to maintain debt service coverage and other financial ratios, and to obtain approval to incur additional debt above specified levels if certain covenant requirements are not met. The terms and provisions of the FHA Loans Documents are solely for the benefit of the parties thereto and may be amended or waived in accordance with their terms, without the consent of or notice to any other creditors of the Hospital. The Lower Manhattan Indebtedness The Lower Manhattan Indebtedness relates to the Secured Hospital Revenue Refunding Bonds (New York Downtown Hospital), Series 2011, which were issued by the Dormitory Authority of the State of New York ( DASNY ). This debt is secured by a mortgage on the Lower Manhattan Hospital facility (the Lower Manhattan Mortgage ) and a security interest in the gross receipts and certain fixtures, furnishings and equipment of the Hospital. Pursuant to a Subordination Agreement, dated as of June 28, 2013 (the DASNY Subordination Agreement ), DASNY agreed to subordinate its interest in the Hospital s gross receipts to the security interests granted under the FHA Loan Documents. In the event of a default under the Lower Manhattan Mortgage loan documents, subject to the DASNY Subordination Agreement, DASNY is entitled to exercise certain rights as a secured party, including the right to accelerate the Lower Manhattan Indebtedness and foreclose on the lien of the Lower Manhattan Mortgage. The proceeds of the exercise of any such rights would be applied to the payment of the Lower Manhattan Indebtedness prior to the payment of any other indebtedness of the Hospital. -3-

7 The MTI Indebtedness The Hospital formed an Obligated Group under and as defined in the Master Trust Indenture, dated as of January 1, 2015 (the Master Trust Indenture ), between the Hospital and TD Bank, N.A., as master trustee (the Master Trustee ). Indebtedness evidenced by an Obligation issued under the Master Trust Indenture constitutes a joint and several obligation of the Hospital and any entity that may in the future become a Member of the Obligated Group (as defined in the Master Trust Indenture), subject to the right of a Member to withdraw from the Obligated Group upon meeting certain conditions set forth in the Master Trust Indenture. Currently, the Hospital is the only Member of the Obligated Group, and there are two Obligations issued under the Master Trust Indenture: (i) Obligation No. 1, which was issued to TD Bank, N.A., as bond trustee for the Hospital s Taxable Bonds, Series 2015 (the Series 2015 Bonds ), and (ii) Obligation No. 2, which was issued to TD Bank, N.A., as bond trustee for the Hospital s Taxable Bonds, Series 2016 (the Series 2016 Bonds ). The Series 2015 Bonds were issued on February 5, 2015 in the amount of $750.0 million. Obligation No. 1 was issued under and pursuant to the Master Trust Indenture and the Supplemental Master Indenture for Obligation No. 1, dated as of January 1, 2015 ( Supplemental Indenture No. 1 ), between the Hospital and the Master Trustee. The Series 2016 Bonds were issued on June 28, 2016 in the amount of $850.0 million. Obligation No. 2 was issued under and pursuant to the Master Trust Indenture and the Supplemental Master Indenture for Obligation No. 2, dated as of June 1, 2016 ( Supplemental Indenture No. 2 ), between the Hospital and the Master Trustee. Pursuant to Supplemental Indenture No. 1 and Supplemental Indenture No. 2, the Hospital has agreed not to withdraw from the Obligated Group as long as Obligation No. 1 or Obligation No. 2 remains outstanding. The Master Indenture does not impose any financial or other tests as a condition to the issuance of additional Obligations, which may be issued from time to time without restriction. The Master Trust Indenture does not grant a security interest in or lien on any property or revenue of the Hospital or any future Members of the Obligated Group to secure the Obligations. Accordingly, Obligation No. 1 and Obligation No. 2 are unsecured. The Master Trust Indenture permits the Members of the Obligated Group to secure Indebtedness, including any additional Obligations, so long as the lien granted is a Permitted Lien under the Master Trust Indenture. Other Indebtedness The Hospital has various capital leases totaling $54.4 million as of December 31, 2016, which are secured by the financed equipment. In addition the Hospital has a $100.0 million unsecured line of credit with a commercial bank that expires on June 30, As of the date of this Disclosure Report, no draws have been made under this line of credit. The Intercreditor Agreement The U.S. Department of Housing and Urban Development, Prudential Huntoon Paige Associates, LLC, DASNY, the Master Trustee, the Series 2015 Bond Trustee and the Series 2016 Bond Trustee have entered into an intercreditor agreement (the Intercreditor Agreement ). The Intercreditor Agreement provides for the cross-default under certain conditions of the FHA-Insured Indebtedness and the Lower Manhattan Indebtedness (collectively, the Senior Debt ) with the Series 2015 Bonds and the Series 2016 Bonds, and sets forth the terms as to the subordinate and junior nature of the Series 2015 Bonds and the Series 2016 Bonds with respect to the Senior Debt. -4-

8 FINANCIAL AND OPERATING INFORMATION Utilization A summary of historical utilization data for the quarters and years ended December 31, 2016 and 2015 for the Hospital is presented in the following table. The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. HISTORICAL UTILIZATION OF THE HOSPITAL Quarter Ended Year Ended 12/31/ /31/ /31/ /31/2015 Certified Beds (at end of period) 2,515 2,515 2,515 2,515 Staffed Beds (at end of period) 2,375 2,380 2,375 2,380 Discharges 1 28,008 27, , ,883 Patient Days 1 184, , , ,561 Staffed Bed Days Available 218, , , ,700 Average Length of Stay (days) Case Mix Index Medicare Case Mix Index - Hospital wide Average Occupancy (%) % 83.1% 84.2% 82.1% Emergency Room Visits 5 71,334 69, , ,067 Outpatient Clinic Visits 158, , , ,726 Ambulatory Surgery Procedures 25,758 25, ,282 98,936 Mental Health Clinic Visits 27,480 28, , ,559 Source: Hospital records. 1 Excludes newborns. 2 Excludes psychiatry, rehabilitation, normal newborn, uncoded and LOS greater than 300 days. 3 Hospital wide CMI is calculated using the payor specific cost weight (APR, AP or MSDRG). 4 Occupancy percentages based on staffed bed days available. 5 Includes only patients seen in the emergency room and not admitted. -5-

9 Sources of Patient Service Revenue The majority of patient services revenue received by the Hospital is derived from programs that are either insured or administered by third-party organizations. The following table reports the percentage of net patient service revenue by payor source for the quarters and years ended December 31, 2016 and The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. Percent of Hospital s Net Patient Service Revenue by Payor Source Payor Quarter Ended Year Ended 12/31/ /31/ /31/ /31/2015 Medicare % 26.0% 25.7% 25.5% Medicaid % 17.7% 17.9% 17.6% Commercial 55.6% 55.8% 55.9% 56.4% Self Pay & Other 0.5% 0.5% 0.6% 0.5% Total 2 100% 100% 100% 100% Source: Hospital records. 1. Medicare includes Medicare Advantage and Medicaid includes Medicaid Managed Care. 2. Totals may not foot due to rounding. The Hospital has established estimates, based on information presently available, of amounts due to or from Medicare and non-medicare payors for adjustments to current and prior years payment rates, based on industry-wide and Hospital-specific data. The current Medicaid, Medicare and other third-party payor programs are based upon extremely complex laws and regulations that are subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount. Additionally, noncompliance with such laws and regulations could result in fines, penalties and exclusion from such programs. The Hospital is not aware of any allegations of noncompliance that could have a material adverse effect on its accompanying consolidated financial statements and believes that it is in compliance with all applicable laws and regulations. -6-

10 Summary Statements of Operations and of Financial Position Summary statements of operations and financial position for the Hospital are set forth below. These summary statements reflect financial results of the Hospital only. The full-year results are derived from the Hospital s audited consolidated financial statements and other information for the years ended December 31, 2016 and December 31, 2015, which, together with the report of independent auditors (the 2016 Audited Financial Statements ) accompany this Disclosure Report. The results for the quarters ended December 31, 2016 and 2015 are derived from the Hospital s unaudited consolidated financial statements and other information for the quarters ended December 31, 2016 and December 31, 2015 (the 4 th Quarter 2016 Unaudited Financial Statements ). The 2016 Audited Financial Statements and the 4 th Quarter 2016 Unaudited Financial Statements include the results of Hospital affiliates that are part of the Hospital s consolidated financial reporting. These consolidated financial statements also contain supplemental information setting forth consolidating statements of financial position and operations that present separately the financial results of the Hospital and the other members of the consolidated group. Effective July 1, 2014, Community Services and its subsidiary, NYP/Lawrence Hospital became subsidiaries of the Hospital. Effective January 26, 2015, Community Programs and its subsidiary, NYP/Hudson Valley Hospital, also became subsidiaries of the Hospital. On July 1, 2015, Community Programs became the parent corporation of NYP/Queens. On December 6, 2016, Community Programs also became the parent corporation of NYP/Brooklyn Methodist and NYP/Lawrence Hospital. Community Services, formerly the parent corporation of NYP/Lawrence, is now inactive. From those respective dates the financial results of each of these direct and indirect subsidiaries are reflected in the consolidated financial statements of the Hospital, except that the financial results of NYP/Queens and NYP/Brooklyn Methodist are reflected from January 1, However, the financial results and utilization data of these subsidiaries are not reflected in the information presented in this disclosure report. Community Services, Community Programs, NYP/Lawrence, NYP/Hudson Valley, NYP/Queens and NYP/Brooklyn Methodist are not Members of the Obligated Group. None of these entities has any financial or other obligation under the Master Trust Indenture or any Bond Indenture to which the Hospital is a party, and none of their assets or revenue is legally committed to the repayment of any of the debt of the Hospital, including the Series 2015 Bonds, the Series 2016 Bonds, Obligation No. 1 or Obligation No. 2. Certain additional information with respect to the Regional Hospitals NYP/Lawrence, NYP/Hudson Valley, NYP/Queens and NYP/Brooklyn Methodist is set forth in Appendix A to this Disclosure Report. -7-

11 SUMMARY STATEMENTS OF OPERATIONS OF THE HOSPITAL (In thousands) Quarter Ended Year Ended 12/31/16 12/31/15 12/31/16 12/31/15 Operating Revenues Net patient service revenue $ 1,278,133 $ 1,168,651 $ 5,009,226 $ 4,586,660 Provision for bad debts (27,975) (37,183) (73,875) (80,921) Net patient service revenue, less provision for bad debts 1,250,158 1,131,468 4,935,351 4,505,739 Other revenue 57,140 69, , ,969 Total operating revenues 1,307,298 1,200,908 5,203,616 4,769,708 Operating Expenses Salaries and wages 620, ,420 2,370,432 2,170,025 Employee benefits 153, , , ,226 Supplies and other expenses 379, ,989 1,564,324 1,450,447 Interest and amortization of deferred financing fees 21,405 16,713 76,219 65,799 Depreciation and amortization 74,067 66, , ,098 Total operating expenses 1,248,755 1,159,567 4,927,836 4,544,595 Operating income 58,543 41, , ,113 Investment return 23,895 32, ,835 (28,591) Excess of revenue over expenses 82,438 73, , ,522 Other changes in unrestricted net assets: Net asset transfers to related parties (4,560) (11,482) (27,163) (16,812) Deed of property, building and equipment to Royal Charter Properties, Inc. - (10,748) - (10,748) Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 32,854 31, , ,460 Change in pension and postretirement benefit liabilities to be recognized in future periods 73,599 35,664 (5,681) (8,752) Change in unrestricted net assets $ 184,331 $ 118,591 $ 496,124 $ 265,670 Source: Audited Consolidated Financial Statements of the Hospital for the years ended December 31, 2016 and 2015 and unaudited financial statements for the quarters ended December 31, 2016 and December 31, Amounts exclude Community Services and Community Programs and its subsidiaries. -8-

12 SUMMARY STATEMENTS OF FINANCIAL POSITION OF THE HOSPITAL (In thousands) December 31, December 31, Assets Current assets: Cash and cash equivalents $ 238,032 $ 227,515 Short-term investments 1,215,698 1,087,581 Patient accounts receivable, net 592, ,992 Other current assets 127, ,249 Assets limited as to use - current portion 30,946 29,640 Professional liabilities insurance recoveries receivable and related deposit - current portion 72,843 69,322 Beneficial interest in net assets held by related organizations - current portion 68,974 73,635 Loans receivable from Lawrence, Queens and Hudson Valley - current portion 8,022 - Due from related organizations - net - 7,427 Total current assets 2,354,420 2,126,361 Assets limited as to use - noncurrent 2,693,002 2,120,717 Property, buildings and equipment - net 2,900,662 2,546,518 Other noncurrent assets - net 2,749 3,029 Loans receivable from Lawrence, Queens and Hudson Valley - noncurrent 179,197 - Professional liabilities insurance recoveries receivable and related deposit - noncurrent 182, ,702 Beneficial interest in net assets held by related organizations - noncurrent 1,697,674 1,659,973 Total assets $ 10,009,795 $ 8,628,300 Source: Audited Consolidated Financial Statements of the Hospital for the years ended December 31, 2016 and December 31, 2015, Supplementary information accompanying the Audited Financial Statements of the Hospital as of December 31, 2016 and 2015 and Hospital records. Amounts exclude Community Services and Community Programs and its subsidiaries. -9-

13 SUMMARY STATEMENTS OF FINANCIAL POSITION OF THE HOSPITAL (continued) (In thousands) December 31, December 31, Liabilities and net assets Current liabilities: Long-term debt - current portion $ 55,764 $ 55,375 Accounts payable and accrued expenses 427, ,604 Accrued salaries and related liabilities 248, ,114 Pension and postretirement benefit liabilities - current portion 21,245 16,014 Professional liabilities and other insurance liabilities - current portion 74,791 69,322 Other current liabilities 195, ,351 Due to related organizations - net 1,681 - Total current liabilities 1,025, ,780 Long-term debt 2,456,515 1,651,884 Professional liabilities and other insurance liabilities 311, ,468 Pension liability 129, ,432 Postretirement benefit liability 22,741 23,846 Deferred revenue 1,509 2,266 Other noncurrent liabilities 294, ,682 Total liabilities 4,241,689 3,389,358 Net assets: Unrestricted 4,001,458 3,505,334 Temporarily restricted - held by related organizations 1,519,775 1,486,642 Permanently restricted - held by related organizations 246, ,966 Total net assets 5,768,106 5,238,942 Total liabilities and net assets $ 10,009,795 $ 8,628,300 Source: Audited Consolidated Financial Statements of the Hospital for the years ended December 31, 2016 and December 31, 2015, Supplementary information accompanying the Audited Financial Statements of the Hospital as of December 31, 2016 and 2015 and Hospital records. Amounts exclude Community Services and Community Programs and its subsidiaries. -10-

14 Liquidity The following table sets forth the Hospital s days cash on hand based on unrestricted cash and investments and average daily operating expenses as of December 31, 2016 and December 31, 2015 derived from the Hospital s audited consolidated financial statements for the years ended December 31, 2016 and December 31, The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. DAYS CASH ON HAND OF THE HOSPITAL ($ in thousands) Year Ended December 31, 2016 Year Ended December 31, 2015 Unrestricted cash and investments (1) $3,888,236 $2,942,748 Average daily operating expenses (2) 12,738 11,733 Days cash on hand (3) Includes all cash and cash equivalents, short-term investments, funded depreciation investments, board designated funds required by the Department of Housing and Urban Development to be so designated in connection with the Hospital s 2013 FHA-insured mortgage loan and investments made with proceeds of the Series 2015 and 2016 Bonds, but excluding any donor restricted funds and other third party restricted funds. 2. Total operating expenses for the period less depreciation and amortization divided by Unrestricted cash and investments divided by average daily operating expenses. On September 21, 2016, the Hospital loaned NYP/Lawrence $6.3 million to refinance its outstanding Westchester County IDA Bonds. This use of cash is reflected in the amount of Hospital s unrestricted cash and investments reported in the above table. The Hospital used $181.5 million of cash in the fourth quarter of 2016 to make two additional loans to affiliates. On November 15, 2016 the Hospital loaned (i) NYP/Queens $124.9 million to refinance one of its two FHA insured mortgage loans and (ii) NYP/Hudson Valley $56.5 million to refinance its two FHA insured mortgage loans. This use of cash is reflected in the amount of Hospital s unrestricted cash and investments reported in the above table. On January 30, 2017, the Hospital also used $327.0 million of cash to make a loan to NYP/Brooklyn Methodist to finance the design, construction and equipping of a new ambulatory care facility. This use of cash will be reflected in the amount of Hospital s unrestricted cash and investments to be reported in its financial statements for the first quarter of

15 The following table sets forth the Hospital s unrestricted cash and investments to long-term debt as of December 31, 2016 and 2015 derived from its audited consolidated financial statements for the years then ended. The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. CASH TO DEBT OF THE HOSPITAL ($ in thousands) December 31, 2016 December 31, 2015 Unrestricted cash and investments (1) $ 3,888,236 $ 2,942,748 Long-term debt: Bonds $ 2,512,913 $ 1,706,659 Other long-term debt (2) 54,354 53,608 Total long-term debt 2,567,267 1,760,267 Less: Current portion of long-term debt (2) (60,185) (59,923) Net long-term debt 2,507,082 1,700,344 Unrestricted cash and investments to Long-term debt 155.1% 173.1% 1. Includes all cash and cash equivalents, short-term investments, funded depreciation investments, board designated funds required by the Department of Housing and Urban Development to be so designated in connection with the Hospital's 2013 FHA-insured mortgage loan and investments made with proceeds of the Series 2015 and 2016 Bonds, but excluding any donor restricted funds and other third party restricted funds. 2. Includes capitalized leases and excludes deferred financing costs which are reported net in current and long-term debt. See discussion above under the caption Liquidity regarding the loans from the Hospital to certain of its affiliates. That discussion also applies to the unrestricted cash and investments reported in the table above. -12-

16 Long-Term Debt Service Coverage The following table sets forth the debt service coverage based on pro-forma maximum annual debt service (as described below) for the Hospital for the years ended December 31, 2016 and The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. LONG-TERM DEBT SERVICE COVERAGE OF THE HOSPITAL ($ in thousands) Year Ended December 31, 2016 Year Ended December 31, 2015 Income available for debt service 1 : Change in unrestricted net assets $ 496,124 $ 265,670 Depreciation and amortization 278, ,098 Interest expense (including receipts and payments related to derivative instruments) 76,219 65,799 Net assets received from Fund, Inc. for the purchase of fixed assets (107,353) (105,460) Gain from sale or disposition of assets not in the ordinary course of business - 10,748 Gain from pension termination settlements or curtailments Change in unrealized gains and losses on investments (31,237) 73,778 Equity in income on alternative investments (70,492) 18,856 Change in pension liability to be recognized in future periods 5,681 8,752 Total $ 647,329 $ 600,524 Pro-Forma Maximum annual debt service 2 191, ,546 Pro-Forma Coverage 3 3.4x 3.1x Notes: 1. Income available for debt service is determined in accordance with the Master Trust Indenture. Line items not relevant to these periods are omitted. 2. Pro-Forma maximum annual debt service for the fiscal years ended December 31, 2016 and 2015 is determined giving effect to (i) the issuance of the Series 2015 Bonds, and assumes level debt service on the Series 2015 Bonds over 30 years with the first principal payment in the fiscal year ending December 31, 2016, and (ii) the issuance of the Series 2016 Bonds, and assumes level debt service on the Series 2016 Bonds over 30 years with the first principal payment in the fiscal year ending December 31, In fact, the Series 2015 Bonds require no payment of principal until their maturity in 2045 and the Series 2016 Bonds require no payment of principal until the maturity of their first tranche in Pro-Forma maximum annual debt service of $191,546 is calculated based upon debt outstanding as of December 31,

17 Capitalization The following table sets forth the historical capitalization of the Hospital as of December 31, 2016 and December 31, The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. CAPITALIZATION OF THE HOSPITAL ($ in thousands) December 31, 2016 December 31, 2015 Long-term debt: Bonds $ 2,512,913 $ 1,706,659 Other long-term debt (1) 54,354 53,608 Total long-term debt 2,567,267 1,760,267 Less: Current portion of long-term debt (1) (60,185) (59,923) Net long-term debt (1) 2,507,082 1,700,344 Unrestricted net assets 4,001,458 3,505,334 Total capitalization 6,508,540 5,205,678 Long-term debt to total capitalization 38.5% 32.7% 1. Includes capitalized leases and excludes deferred financing costs which are reported net in current and long-term debt. -14-

18 Management s Discussion and Analysis of Utilization Quarter ended December 31, 2016 compared to quarter ended December 31, 2015 For the quarter ended December 31, 2016, the Hospital s inpatient discharges increased 905 cases or 3.3% compared to the same period in This was attributable to new physician recruits across various services and the addition of new clinical programs at various campuses. Emergency Room visits increased 1,689 visits or 2.4% compared to the same period in 2015 primarily due to the completion of the fifth phase of a multi-phase renovation and expansion of the Milstein Emergency Department at the Columbia Irving Campus. Outpatient Clinic visits decreased 10,069 visits or 6.0% compared to the same period in 2015 primarily due to decreased volumes at the primary care offsite clinics and specialty and HIV clinics related to a shortage in primary care physicians and the elimination of neurology, urology and orthopedic clinics at the Allen Hospital. Ambulatory Surgery procedures increased 486 cases or 1.9% compared to the same period in 2015 primarily due to an increase in outpatient cardiac catheterization volume, in part resulting from the opening of a new catheterization lab in Westchester County. In addition, there were increases in ambulatory surgeries and endoscopies at the Columbia Irving and Cornell Campuses as a result of new physician recruits across various programs. Mental Health Clinic visits decreased 931 visits or 3.3% compared to the same period in 2015 primarily due to the decrease in Autism visits as a result of difficulty recruiting specialty providers and lower volume in the adult psychiatric clinics at the Columbia Irving Campus. Year ended December 31, 2016 compared to year ended December 31, 2015 For the year ended December 31, 2016, the Hospital s inpatient discharges increased 3,563 cases or 3.3% compared to the same period in This was attributable to new physician recruits across various services and the addition of new clinical programs at various campuses. Emergency Room visits increased 10,629 visits or 3.9% compared to the same period in 2015 primarily due to the completion of the fifth phase of a multi-phase renovation and expansion of the Milstein Emergency Department at the Columbia Irving Campus and increased volume in the Lower Manhattan Emergency Department. Outpatient Clinic visits decreased 17,524 or 2.7% compared to the same period in 2015 primarily due to decreased volumes at the primary care offsite clinics and specialty and HIV clinics related to a shortage in primary care physicians and the elimination of neurology, urology and orthopedic clinics at the Allen Hospital. Ambulatory Surgery procedures increased 4,346 cases or 4.4% compared to the same period in 2015 primarily due to an increase in outpatient cardiac catheterization volume, in part resulting from the opening of a new catheterization lab in Westchester County. In addition, there were increased ambulatory surgery volumes across all campuses as a result of new physician recruits across various programs. Mental Health Clinic visits decreased 3,443 visits or 3.0% compared to the same period in This decrease was driven primarily by the closure of the Day Hospitalization program and decrease in the Autism visits as a result of difficulty recruiting specialty providers. -15-

19 Management s Discussion and Analysis of Recent Financial Performance Quarter ended December 31, 2016 compared to Quarter ended December 31, 2015 For the quarter ended December 31, 2016, the Hospital had operating income of $58.5 million, a $17.2 million or 41.6% increase compared to the same period in Excess of revenues over expenses was $82.4 million, which represented an $8.5 million or 11.5% increase over the same period in For the quarter ended December 31, 2016, net patient service revenue, less provision for bad debt, increased $118.7 million or 10.5% over the same period the previous year. This increase was driven primarily by a 3.3% increase in inpatient discharges, realizing higher rates and higher case mix. For the quarter ended December 31, 2016, other revenue decreased $12.3 million or 17.7% compared to the same period in 2015 primarily due to the decrease in net assets released from restrictions and lower distributions from the real estate operations. For the quarter ended December 31, 2016, total operating expenses increased $89.2 million or 7.7% compared with the same period in the previous year. Salaries and benefits increased $58.2 million or 8.1% over the same period in the previous year. This increase was primarily a function of having 1,080 more full time equivalents to accommodate increased patient days, investments in care coordination and population health, information technology and innovation, expanded emergency services and new clinical initiatives, most notably the spine programs at the Allen Hospital and Lower Manhattan Hospital, coupled with the corresponding increase in benefits and wage increases. For the quarter ended December 31, 2016, supplies and other expenses increased $19.1 million or 5.3% over the previous year. This increase was primarily due to an increase in medical and surgical supplies resulting from higher inpatient discharges, higher acuity, more emergency room visits and surgical procedures, increase in pharmaceuticals resulting from more ambulatory oncology visits. Interest and amortization of deferred financing fees increased by $4.7 million or 28.1% as a result of the issuance of the $850.0 million Series 2016 bonds in June Depreciation expense increased $7.2 million or 10.8% reflecting the completion of a number of Hospital capital projects. Year ended December 31, 2016 compared to year ended December 31, 2015 For the year ended December 31, 2016, the Hospital had operating income of $275.8 million, a $50.7 million or 22.5% increase over the same period in Excess of revenues over expenses was $421.6 million, which represented a $225.1 million or 114.5% increase over the same period in This increase was partially attributed to the increase in investment return of $174.4 million. For the year ended December 31, 2016, net patient service revenue, less provision for bad debt, increased $429.6 million or 9.5% over the same period the previous year. This increase was driven primarily by a 3.3% increase in inpatient discharges, realizing higher rates, higher acuity and increased outpatient activity across all outpatient services except clinic visits. For the year ended December 31, 2016, other revenue increased $4.3 million or 1.6% over the same period in 2015, due primarily to increased distribution from provider owned plans and grant revenue related to the New York State s Delivery System Reform Incentive Payment (DSRIP) program. For the year ended December 31, 2016, total operating expenses increased $383.2 million or 8.4% compared with the same period in the previous year. Salaries and benefits increased $242.7 million or 8.8% over the same period in the previous year. This increase was primarily a function of having 1,087 more full time equivalents to accommodate increased patient days, higher acuity, investments in care coordination and population health, information technology and innovation, expanded emergency services and new clinical -16-

20 initiatives, most notably the spine programs at the Allen Hospital and Lower Manhattan Hospital, coupled with the corresponding increase in benefits and wage increases. For the year ended December 31, 2016, supplies and other expenses increased $113.9 million or 7.9% over the previous year. This increase was primarily due to an increase in medical and surgical supplies resulting from higher inpatient discharges, higher acuity, higher outpatient activity and surgical procedures and pharmaceuticals resulting from more ambulatory oncology visits. Interest and amortization of deferred financing fees increased by $10.4 million or 15.8% as a result of the issuance of the $850.0 million Series 2016 bonds in June Depreciation expense increased $16.3 million or 6.2% reflecting the completion of a number of Hospital capital projects. -17-

21 Outstanding Long-term Indebtedness A summary of long-term indebtedness of the Hospital as of December 31, 2016 and 2015 is set forth in the following table. The table excludes (i) Community Services and (ii) Community Programs and its subsidiaries. OUTSTANDING LONG-TERM INDEBTEDNESS OF THE HOSPITAL (in thousands) Indebtedness Maturity Date December 31, 2016 Outstanding at December 31, 2015 FHA-Insured Mortgage Loan (fixed rate, taxable) 2025 $ 199,510 $ 218,404 Mortgage Loan (fixed rate, taxable) , ,341 Mortgage Loan (fixed rate, taxable) , ,359 MTI Series 2015 Bonds (fixed rate, taxable) , ,000 Series 2016 Bonds (fixed rate, taxable) ,000 - Series 2016 Bonds (fixed rate, taxable) ,000 - Series 2016 Bonds (fixed rate, taxable) ,000 - Lower Manhattan Hospital Dormitory Authority of the State of New York Secured Hospital Revenue Refunding Bonds, Series 2011 (fixed rate, tax-exempt) ,295 26,555 Other Capitalized leases 54,354 53,608 Total $ 2,567,267 $ 1,760,267 Add: Unamortized fair value adjustment related to NYP/Lower Manhattan acquisition 929 1,289 Less: Deferred financing cost, net of accumulated amortization 55,918 54,297 Total $ 2,512,278 $ 1,707,259 The Hospital has a $100.0 million committed unsecured line of credit agreement with a bank that expires on June 30, No amounts have been drawn on this facility. This is a 364-day line of credit that is generally renewed annually. -18-

22 Investments The following is a summary table of the Hospital s cash and investment assets, including the Hospital s beneficial interest in net assets held by related organizations as of December 31, The table excludes assets invested in the Hospital s pension plans, as well as assets of (i) Community Services and (ii) Community Programs and its subsidiaries. CASH AND INVESTMENT ASSETS OF THE HOSPITAL Total Beneficial Hospital Investment Assets Interest Assets Total (in billions) $5.5 $1.3 $4.2 Cash 11 % 0 % 15% Treasuries Public Equity Private Equity Real Estate Natural Resources Hedge Funds Credit % 100 % 100% Source: Hospital records. For long-term funds, the Hospital has adopted a return-oriented, well-diversified asset allocation strategy. Results for the long-term investment funds have generally outperformed benchmarks. The Hospital s investment assets, including the Hospital s beneficial interest in net assets held by related organizations, along with the assets invested in the Hospital s pension plans, comprise the majority of the investment assets under the purview of the Investment Committee and Investment Staff. The Hospital component in the table above includes investments limited as to use, including funded depreciation, funds held under loan agreements, and funded self-insurance. The Hospital component also includes short-term and cash equivalent investments maintained for purposes of operations and other needs of the Hospital, escrow funds, and other assets. The beneficial interest component is almost entirely comprised of the Hospital s beneficial interest in Fund, Inc. The table does not include investments held by the Hospital s pension plan, which is invested similar to other long-term assets. The following table shows, as of December 31, 2016, the liquidity of the Hospital s investment portfolio, with 80% or $4.4 billion of assets accessible within one month. Pension assets are not included. The table excludes assets of (i) Community Services and (ii) Community Programs and its subsidiaries. -19-

23 LIQUIDITY OF HOSPITAL S INVESTMENT PORTFOLIO Hospital Long-Term Fund Hospital Current Investments Total 1-5 Days 47% 100% 77% 6-31 Days 6 N/A Months 10 N/A Months 5 N/A Years 6 N/A 3 3+ Years 26 N/A 11 Total 100% 100% 100% Source: Hospital records. The following table shows (i) the amount of investment assets of the Hospital under management as of December 31, 2016, and 2015, and (ii) the investment performance of the long-term portfolio through December 31, The table excludes assets invested in the Hospital s pension plans and (i) Community Services and (ii) Community Programs and its subsidiaries. Investment Assets Under Management (in billions) As of December 31, 2016 As of December 31, 2015 $5.5 $4.8 Long-Term Portfolio Performance through 12/31/16 Source: Hospital records. 5 Year 3 Year 1 Year 7.1% 3.8% 7.1% -20-

24 Philanthropy In 2007, after completing a $1.0 billion campaign three years ahead of schedule, the Hospital, through Fund, Inc., began the Quiet Phase of a $2.0 billion campaign. This campaign was publicly launched in As of December 31, 2016, over $973.5 million in pledges and gifts have been made towards this campaign since its public launch date. When considering pledges and gifts received during the Quiet Phase of the campaign, as of December 31, 2016 the Hospital has received pledges and gifts of $1.7 billion against the $2.0 billion campaign. An additional campaign has been launched to raise $300 million for the Alexandra Cohen Hospital for Women and Children. As of December 31, 2016, the Hospital has received pledges and gifts of $87.9 million for this campaign. The collection rate for pledges, based on recent history, has been close to 100%. Fund, Inc. During the year ended December 31, 2016 and 2015, Fund Inc. distributed approximately $107.4 million and $105.5 million, respectively, for the purchase of fixed assets to the Hospital. There is, however, no legal or contractual requirement that Fund Inc. continue to make distributions of unrestricted assets to the Hospital. Fund, Inc. also holds certain assets on behalf the Hospital that are restricted and may only be used for the benefit of the Hospital. Capital Expenditures For the years ended December 31, 2016 and 2015, the Hospital (not including its direct and indirect subsidiaries) incurred capital expenditures of $614.3 million and $492.7 million, respectively, for acquisition of plant, property and equipment (net of disposals). These expenditures were funded from internally generated cash flow, donations and proceeds of loans. For the year ended December 31, 2016 and 2015, Fund, Inc. on behalf of the Hospital received approximately $150.8 million and $184.5 million, respectively, in new gifts and pledges from individual, foundation and corporate donors for capital acquisitions and other purposes. Royal Charter Properties For the years ended December 31, 2016 and 2015, the RCP Corporations had an aggregate net operating income of approximately $52.3 million and $50.3 million, respectively. Historically, on an annual basis, each of the RCP Corporations has turned over its excess of revenue over expenses ( Excess Revenue ) to the Hospital. For the years ended December 31, 2016 and 2015, these amounts totaled $38.9 million and $46.6 million, respectively, and are included in other operating revenue in the Statement of Operations of the Hospital. However, the board of directors of each of the RCP Corporations has complete discretion within its stated corporate purposes with respect to the distribution of its Excess Revenue; there is no legal or contractual requirement that these amounts be distributed to the Hospital. Royal Charters Properties, Inc. did not transfer its Excess Revenue to the Hospital in