Northwell Health, Inc. Consolidated Financial Statements and Supplementary Information For the Six Months Ended June 30, 2016 and 2015

Transcription

1 Consolidated Financial Statements and Supplementary Information For the Six Months Ended June 30, 2016 and 2015 Contents Page Consolidated Financial Statements: Consolidated Statements of Financial Position 1 Consolidated Statements of Operations 2 Consolidated Statements of Changes in Net Assets 3 Consolidated Statements of Cash Flows 4 Supplementary Information: Consolidating Statement of Financial Position 5 Combining Statement of Financial Position - Northwell Health Obligated Group 6 Consolidating Statement of Financial Position - Phelps Memorial Hospital 7 Consolidating Statement of Financial Position - Northern Westchester Hospital 8 Consolidating Statement of Operations 9 Combining Statement of Operations - Northwell Health Obligated Group 10 Consolidating Statement of Operations - Phelps Memorial Hospital 11 Consolidating Statement of Operations - Northern Westchester Hospital 12 Utilization Statistics - Northwell Health Obligated Group 13 Payer Mix - Northwell Health Obligated Group 14 Notes to Consolidated Financial Statements 15

2 Consolidated Statements of Financial Position June 30, 2016 and December 31, 2015 (In Thousands) Assets Current assets: Cash and cash equivalents 423,579 (Unaudited) (Audited) June 30, December 31, $ $ 432,829 Marketable securities and other investments 1,929,901 1,844,892 Accounts receivable for services to patients, net of allowance for doubtful accounts 999, ,130 Accounts receivable for physician activities, net 113, ,902 Assets limited as to use, current portion 115, ,683 Pledges receivable, current portion 34,594 35,097 Insurance claims receivable, current portion 67,729 71,068 Other current assets 257, ,968 Total current assets 3,941,679 3,681,569 Assets limited as to use, net of current portion 1,476,142 1,508,032 Pledges receivable, net of current portion 90,216 91,090 Property, plant and equipment, net 4,479,236 4,315,166 Insurance claims receivable, net of current portion 266, ,530 Other assets 278, ,340 Total assets $ 10,532,465 $ 10,138,727 Liabilities and net assets Current liabilities: Short-term borrowings $ 110,218 $ 110,218 Accounts payable and accrued expenses 876, ,653 Accrued salaries and related benefits 626, ,383 Current portion of capital lease obligations 4,900 3,138 Current portion of long-term debt 56,693 55,613 Current portion of insurance claims liability 67,729 71,068 Current portion of malpractice and other insurance liabilities 103, ,720 Current portion of third-party payer structured liabilities 4,346 4,346 Current portion of estimated payable to third-party payers 270, ,768 Total current liabilities 2,120,895 1,940,907 Accrued retirement benefits, net of current portion 810, ,972 Capital lease obligations, net of current portion 175, ,888 Long-term debt, net of current portion 2,194,234 2,199,401 Insurance claims liability, net of current portion 266, ,530 Malpractice and other insurance liabilities, net of current portion 926, ,794 Third-party payer structured liabilities, net of current portion 3,724 8,303 Other long-term liabilities 618, ,892 Total liabilities 7,117,356 6,899,687 Commitments and contingencies Net assets: Unrestricted 2,897,968 2,710,921 Temporarily restricted 348, ,573 Permanently restricted 168, ,546 Total net assets 3,415,109 3,239,040 Total liabilities and net assets $ 10,532,465 $ 10,138,727 See accompanying notes. 1

3 Consolidated Statements of Operations For the Six Months Ended June 30, 2016 and 2015 (In Thousands) (Unaudited) (Unaudited) Operating revenue: Net patient service revenue $ 3,732,766 $ 3,378,231 Physician practice revenue 620, ,727 Provision for bad debts (60,842) (53,393) Total patient revenue, net of provision for bad debts 4,292,655 3,862,565 Other operating revenue 248, ,405 Net health insurance premium revenue 253,543 95,284 Net assets released from restrictions used for operations 28,516 33,098 Total operating revenue 4,822,876 4,209,352 Operating expenses: Salaries 2,302,818 2,105,918 Employee benefits 606, ,307 Supplies and expenses 1,588,742 1,248,601 Depreciation and amortization 203, ,843 Interest 54,860 52,979 Total operating expenses 4,756,393 4,156,648 Excess of operating revenue over operating expenses 66,483 52,704 Non-operating gains and losses: Investment income 16,442 27,915 Change in net unrealized gains and losses and change in value of equity method investments 50,862 15,483 Change in fair value of interest rate swap agreements designated as derivative instruments Loss on refunding and redemption of long-term debt - (56,975) Contributions received in the acquisitons of Peconic Bay Medical Center (2016), Phelps Memorial Hospital (2015) and Northern Westchester Hospital (2015) 36, ,807 Gain from acquired interest in Optum ,600 Other non-operating gains and losses (4,319) (1,717) Total non-operating gains and losses 99, ,485 Excess of revenue and gains and losses over expenses 166, ,189 Net assets released from restrictions for capital asset acquisitions 24,573 3,765 Change in fair value of interest rate swap agreements designated as cash flow hedges (776) 600 Recovery of fair value of endowment corpus Other changes in net assets (3,280) (1,348) Increase in unrestricted net assets $ 187,047 $ 416,206 See accompanying notes. 2

4 Consolidated Statements of Changes in Net Assets For the Six Months Ended June 30, 2016 and 2015 (In Thousands) (Unaudited) Temporarily Permanently Total Unrestricted Restricted Restricted Net assets, December 31, 2014 $ 2,833,391 $ 2,340,552 $ 357,127 $ 135,712 Contributions and grants 35,025-17,842 17,183 Investment income 3,038-3,038 - Change in net unrealized gains and losses and change in value of equity method investments 1,607-1,607 - Contributions received in the acquisitons of Phelps Memorial Hospital and Northern Westchester Hospital 35,061-25,855 9,206 Excess of revenue and gains and losses over expenses 413, , Net assets released from restrictions for: Capital asset acquisitions - 3,765 (3,765) - Operations (33,098) - (33,098) - Non-operating activities (11,255) - (11,255) - Change in fair value of interest rate swap agreements designated as cash flow hedges Other changes in net assets (1,348) (1,348) - Increase in net assets 442, , ,389 Net assets, June 30, 2015 $ 3,276,210 $ 2,756,758 $ 357,351 $ 162,101 (Unaudited) Temporarily Permanently Total Unrestricted Restricted Restricted Net assets, December 31, 2015 $ 3,239,040 $ 2,710,921 $ 363,573 $ 164,546 Contributions and grants 44,956-41,912 3,044 Investment income 2,167-2,167 - Change in net unrealized gains and losses and change in value of equity method investments 1,527-1,527 - Contribution received in the acquisiton of Peconic Bay Medical Center 3,285-2, Excess of revenue and gains and losses over expenses 166, , Net assets released from restrictions for: Capital asset acquisitions - 24,573 (24,573) - Operations (28,516) - (28,516) - Non-operating activities (9,322) - (9,322) - Change in fair value of interest rate swap agreements designated as cash flow hedges (776) (776) - - Recovery of fair value of endowment corpus (502) - Other changes in net assets (3,280) (3,280) - - Increase (decrease) in net assets 176, ,047 (14,809) 3,831 Net assets, June 30, 2016 $ 3,415,109 $ 2,897,968 $ 348,764 $ 168,377 See accompanying notes. 3

5 Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2016 and 2015 (In Thousands) (Unaudited) (Unaudited) Cash flows from operating activities Increase in net assets $ 176,069 $ 442,819 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Contributions received in the acquisitions of Peconic Bay Medical Center (2016), Phelps Memorial Hospital (2015) and Northern Westchester Hospital (2015) (39,655) (294,868) Permanently restricted contributions (3,044) (17,183) Depreciation and amortization 203, ,843 Net realized gains and losses, change in net unrealized gains and losses and change in value of equity method investments (57,689) (34,984) Change in fair value of interest rate swap agreements 586 (972) Gain from acquired interest in Optum360 - (115,600) Loss on refunding and redemption of long-term debt - 56,975 Changes in operating assets and liabilities: Accounts receivable for services to patients, net (110,483) (25,987) Accounts receivable for physician activities, net (490) 5,009 Pledges receivable 4,425 27,502 Current portion of estimated payable to third party-payers 27,155 44,936 Accrued retirement benefits, net of current portion 23,696 10,315 Malpractice and other insurance liabilities 35,236 55,537 Net change in all other operating assets and liabilities 58,456 (39,624) Net cash provided by operating activities 317, ,718 Cash flows from investing activities Capital expenditures (287,977) (300,182) Net cash from sale of (invested in) marketable securities and other investments and assets limited as to use 701 (48,097) Cash received in the acquisitions of Peconic Bay Medical Center (2016), Phelps Memorial Hospital (2015) and Northern Westchester Hospital (2015) 19,100 71,243 Payments for joint venture investments, net (14,500) (6,915) Net cash used in investing activities (282,676) (283,951) Cash flows from financing activities Principal payments on long-term debt and capital lease obligations (40,816) (47,196) Payments on refunded and redeemed long-term debt - (483,555) Payments on short-term borrowings - (110,000) Principal payments on third-party payer structured liabilities (4,579) (2,049) Proceeds from short-term borrowings - 110,000 Proceeds from long-term debt - 543,569 Net proceeds received from real estate financing transactions - 169,516 Payments for financing costs - (5,385) Proceeds from permanently restricted contributions 996 2,318 Net cash (used in) provided by financing activities (44,399) 177,218 Net (decrease) increase in cash and cash equivalents (9,250) 202,985 Cash and cash equivalents, beginning of period 432, ,570 Cash and cash equivalents, end of period $ 423,579 $ 397,555 Supplemental disclosure of cash flow information Cash paid during the period for interest (exclusive of amount capitalized) $ 54,347 $ 55,224 See accompanying notes. 4

6 Consolidating Statement of Financial Position June 30, 2016 (Unaudited and In Thousands) Phelps Northern Northwell Memorial Westchester The Feinstein Other Northwell Health Hospital Hospital Hospice Institute for Northwell Northwell Regional Health Endoscopy Northwell Health, Inc. Obligated Association Association Peconic Bay The Long Care Medical Health Health Insurance Dolan Family Insurance Center of Garden City South Shore Health Total Eliminations Group and Subsidiaries and Subsidiaries Medical Center Island Home Network Research Foundation Laboratories Company Health Center Companies Long Island SurgiCenter Surgery Center Entities Assets Current assets: Cash and cash equivalents $423,579 $- $188,007 $30,753 $50,709 $20,548 $5,600 $8,391 $- $14,502 $- $78 $1 $94,176 $648 $314 $294 $9,558 Marketable securities and other investments 1,929,901-1,864,003 5,973-3, , , , Accounts receivable for services to patients, net of allowance for doubtful accounts 999,640 (30,828) 922,557 25,322 25,237 10,405 15,576 8, , ,670 Accounts receivable for physician activities, net 113,139 (4,952) 98,873 3,058 1, ,032 Assets limited as to use, current portion 115,719-84,669 1,639 2,769 4, , Pledges receivable, current portion 34, , Insurance claims receivable, current portion 67,729 (16,691) 82, , Other current assets 257,378 (100) 172,385 7,396 6,789 8,854 2, , , , ,051 Total current assets 3,941,679 (52,571) 3,412,664 74,141 86,675 47,978 25,062 40,401 15,038 55,642 17,345 22,523 1, , ,447 37,683 Due from affiliates, net - (114,786) 13, ,177 46,437 53, Note receivable from affiliate - (42,489) 42, Assets limited as to use, net of current portion 1,476,142 (192,929) 1,106,210 23,939 81,373 6,892 7,000 1,755 70,304 73, ,069 5,926 72, ,762 Pledges receivable, net of current portion 90, ,172 3, , ,908 Property, plant and equipment, net 4,479,236-3,876, , ,676 79,295 57, ,933 1,208 9, , ,286 3,069 61,413 Insurance claims receivable, net of current portion 266,924 (192,622) 426,091 7, , ,160 18, Other assets 278,268 (493,426) 696,765 5,626 8,131 5,230 9, , ,939 6,344 3,719 3,311 Total assets $10,532,465 ($1,088,823) $9,573,688 $261,868 $360,783 $139,395 $104,927 $43,689 $141,653 $212,341 $74,896 $304,227 $8,243 $230,283 $31,030 $7,944 $8,244 $118,077 Liabilities and net assets (deficit) Current liabilities: Short-term borrowings $110,218 $- $110,218 $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- Accounts payable and accrued expenses 876,939 (35,881) 564,372 9,684 27,979 15,049 3,321 1,871 11, , , ,445 Accrued salaries and related benefits 626, ,102 10,853 10,657 8,477 7,010 1,802 5, , , ,757 Current portion of capital lease obligations 4,900-1, , ,008 - Current portion of long-term debt 56,693-48,622 1,631 2,782 2, Current portion of insurance claims liability 67,729 (16,691) 82, , Current portion of malpractice and other insurance liabilities 103,019 (5,220) 68,135 1,827 4,563 1, , Current portion of third-party payer structured liabilities 4,346-4, Current portion of estimated payable to third-party payers 270, , ,376 2, , Total current liabilities 2,120,895 (57,792) 1,688,442 23,995 47,253 32,805 16,013 3,712 17,224 1,167 48,299 31, , ,360 79,232 Due to affiliates, net - (51,011) - 3,191 3,662 1,869 5, , ,889 1, ,632 Note payable to affiliate - (42,489) , Accrued retirement benefits, net of current portion 810, ,372 4,837 38,599 4,435 9, Capital lease obligations, net of current portion 175, , , ,144 - Long-term debt, net of current portion 2,194,234-2,040,666 34,992 60,082 34,141 24, Insurance claims liability, net of current portion 266,924 (192,622) 426,091 7, , ,160 18, Malpractice and other insurance liabilities, net of current portion 926,828 (60,064) 727,649 16,764 19,939 10,940 3, , Third-party payer structured liabilities, net of current portion 3,724-3, Other long-term liabilities 618, ,012 1,692 8,228 12,247 1, ,184 1, Total liabilities 7,117,356 (403,978) 6,396,004 92, ,763 99, ,872 4,840 26,224 8,376 50, ,331 10, , ,504 96,710 Commitments and contingencies Net assets (deficit): Unrestricted 2,897,968 (453,379) 2,781, , ,025 36,297 (3,945) 37,066 27, ,133 45,896 (8,138) 42,513 30,609 7,461 5,740 9,471 Temporarily restricted 348,764 (192,621) 317,606 8,637 18,948 2,996-1,405 44, , , ,896 Permanently restricted 168,377 (38,845) 78,945 3,397 7, ,257 69, , Total net assets (deficit) 3,415,109 (684,845) 3,177, , ,020 40,080 (3,945) 38, , ,965 24,133 45,896 (2,212) 42,513 30,609 7,461 5,740 21,367 Total liabilities and net assets (deficit) $10,532,465 ($1,088,823) $9,573,688 $261,868 $360,783 $139,395 $104,927 $43,689 $141,653 $212,341 $74,896 $304,227 $8,243 $230,283 $31,030 $7,944 $8,244 $118,077 5

7 Combining Statement of Financial Position - Northwell Health Obligated Group June 30, 2016 (Unaudited and In Thousands) Long Island Northwell Health Total North Shore Jewish Staten Island Huntington Stern Family Obligated Northwell University Medical University Lenox Hill Southside Hospital Glen Cove Plainview Center for Group Eliminations Healthcare, Inc. Hospital Center (*) Hospital Hospital Hospital Association Hospital Hospital Rehabilitation Assets Current assets: Cash and cash equivalents $188,007 $- $136,927 $10,479 $778 $21,134 $375 $207 $18,054 $38 $14 $1 Marketable securities and other investments 1,864,003-18, , , ,465 40,341 2, ,729 74, Accounts receivable for services to patients, net of allowance for doubtful accounts 922, , , , ,802 63,973 37,996 13,861 20,852 9,055 Accounts receivable for physician activities, net 98, ,275 2,056-1, Assets limited as to use, current portion 84,669-10,001 45,891 18, ,904 1,690 1, Insurance claims receivable, current portion 82, ,408 22,767 11,600 14,586 5,009 3,826 1,483 2, Other current assets 172,385 (3,000) 25,538 55,553 42,288 17,193 19,752 6,301 5,358 1,372 1, Total current assets 3,412,664 (3,000) 191,792 1,137, , , ,529 80, ,223 92,145 25,832 10,263 Due from affiliates, net 13,429 (228,716) - 68, , ,578 22,718 Note receivable from affiliate 42,489-42, Assets limited as to use, net of current portion 1,106, , , , ,939 54,433 45,669 50,615 7, ,932 Property, plant and equipment, net 3,876, , ,873 1,241, , , , ,797 48,091 33,026 10,865 Insurance claims receivable, net of current portion 426,091-3, , ,856 63,836 61,200 26,561 20,958 7,798 11,633 1,042 Other assets 696,765 (541,199) 1,101,162 87,637 12,613 11,306 23,856 1, Total assets $9,573,688 ($772,915) $2,269,599 $2,051,551 $2,740,226 $915,262 $1,305,694 $323,563 $438,593 $155,655 $87,640 $58,820 Liabilities and net assets (deficit) Current liabilities: Short-term borrowings $110,218 $- $- $7,500 $102,718 $- $- $- $- $- $- $- Accounts payable and accrued expenses 564, , , ,695 53,920 60,158 29,361 20,790 8,904 9,517 1,587 Accrued salaries and related benefits 546, , , ,510 46,723 45,989 29,588 20,855 8,475 10,590 1,969 Current portion of capital lease obligations 1,759-1, Current portion of long-term debt 48, ,942 19,203 8,425 4,915 1,145 1, , Current portion of insurance claims liability 82, ,408 22,767 11,600 14,586 5,009 3,826 1,483 2, Current portion of malpractice and other insurance liabilities 68,135-15,545 14,225 16,751 8,737 4,032 3,627 2,596 1,181 1,441 - Current portion of third-party payer structured liabilities 4, , Current portion of estimated payable to third-party payers 262, ,028 99,554 40,307 27,331 19,619 2,762 8,103 7,231 3,783 Total current liabilities 1,688, , , , , ,259 88,349 51,999 28,895 32,587 8,425 Due to affiliates, net - (353,511) 133, , ,175 70,948 9, Accrued retirement benefits, net of current portion 753, , ,436 65,094 3, ,169 63, ,319 13,477 21,020 4,016 Capital lease obligations, net of current portion 171, ,720-66,667-2, Long-term debt, net of current portion 2,040, , , ,432 78, ,189 69,963 77,097 6,679 9,976 3,925 Insurance claims liability, net of current portion 426,091-3, , ,856 63,836 61,200 26,561 20,958 7,798 11,633 1,042 Malpractice and other insurance liabilities, net of current portion 727,649-88, , ,741 91,550 61,242 44,938 33,871 12,389 15,880 - Third-party payer structured liabilities, net of current portion 3, , Other long-term liabilities 585,012-5, , ,331 43,149 86,715 48,183 16,611 12,475 19, Total liabilities 6,396,004 (353,511) 1,490,429 1,021,248 2,043, , , , ,148 81, ,644 18,125 Commitments and contingencies Net assets (deficit): Unrestricted 2,781,133 (338,099) 656, , , , ,779 (111,391) 117,216 62,499 (23,467) 39,886 Temporarily restricted 317,606 (56,386) 86,976 72, ,442 11,696 56,386 22,896 7,066 8, Permanently restricted 78,945 (24,919) 36,150 28,152 9,160 1,484 24,919-1,163 2, Total net assets (deficit) 3,177,684 (419,404) 779,170 1,030, , , ,084 (88,495) 125,445 73,942 (23,004) 40,695 Total liabilities and net assets (deficit) $9,573,688 ($772,915) $2,269,599 $2,051,551 $2,740,226 $915,262 $1,305,694 $323,563 $438,593 $155,655 $87,640 $58,820 (*) Effective January 14, 2016, Forest Hills Hospital and Franklin Hospital merged into Long Island Jewish Medical Center. 6

8 Consolidating Statement of Financial Position - Phelps Memorial Hospital June 30, 2016 (Unaudited and In Thousands) Phelps Memorial Hospital Phelps Memorial Phelps Phelps Association and Hospital Professional Medical Subsidiaries Eliminations Association Building Co. Associates Assets Current assets: Cash and cash equivalents $30,753 $- $17,409 $2,021 $11,323 Marketable securities and other investments 5,973-5, Accounts receivable for services to patients, net of allowance for doubtful accounts 25,322-25, Accounts receivable for physician activities, net 3,058-1,616-1,442 Assets limited as to use, current portion 1,639-1, Other current assets 7,396-7, Total current assets 74,141-59,041 2,335 12,765 Due from affiliates, net - (16,505) 16, Assets limited as to use, net of current portion 23,939-23, Pledges receivable, net of current portion 3,172-3, Property, plant and equipment, net 147, ,368 9,590 - Insurance claims receivable, net of current portion 7,032-7, Other assets 5,626 (1,634) 7, Total assets $261,868 ($18,139) $255,317 $11,925 $12,765 Liabilities and net assets (deficit) Current liabilities: Accounts payable and accrued expenses $9,684 $- $9,684 $- $- Accrued salaries and related benefits 10,853-10, Current portion of long-term debt 1,631-1, Current portion of malpractice and other insurance liabilities 1,827-1, Total current liabilities 23,995-23, Due to affiliates, net 3,191 (16,505) ,968 Accrued retirement benefits, net of current portion 4,837-4, Long-term debt, net of current portion 34,992-31,435 3,557 - Insurance claims liability, net of current portion 7,032-7, Malpractice and other insurance liabilities, net of current portion 16,764-16, Other long-term liabilities 1,692-1, Total liabilities 92,503 (16,505) 85,434 4,337 19,237 Commitments and contingencies Net assets (deficit): Unrestricted 157,331 (1,634) 157,849 7,588 (6,472) Temporarily restricted 8,637-8, Permanently restricted 3,397-3, Total net assets (deficit) 169,365 (1,634) 169,883 7,588 (6,472) Total liabilities and net assets (deficit) $261,868 ($18,139) $255,317 $11,925 $12,765 7

9 Consolidating Statement of Financial Position - Northern Westchester Hospital June 30, 2016 (Unaudited and In Thousands) Northern Westchester Northern Northern Hospital Westchester Westchester Association and Hospital Hospital Center Other Subsidiaries Eliminations Association Foundation Subsidiaries Assets Current assets: Cash and cash equivalents $50,709 $- $50,575 $- $134 Accounts receivable for services to patients, net of allowance for doubtful accounts 25,237-25, Accounts receivable for physician activities, net 1,171-1, Assets limited as to use, current portion 2,769-2, Other current assets 6,789-6, Total current assets 86,675-86, Due from affiliates, net - (3,934) 3, Assets limited as to use, net of current portion 81,373-59,867 21,506 - Pledges receivable, net of current portion 3, ,928 - Property, plant and equipment, net 180, ,868-14,808 Other assets 8,131-7, Total assets $360,783 ($3,934) $322,812 $25,434 $16,471 Liabilities and net assets Current liabilities: Accounts payable and accrued expenses $27,979 $- $27,566 $66 $347 Accrued salaries and related benefits 10,657-10, Current portion of capital lease obligations Current portion of long-term debt 2,782-2, Current portion of malpractice and other insurance liabilities 4,563-4, Current portion of estimated payable to third-party payers Total current liabilities 47,253-46, Due to affiliates, net 3,662 (3,934) - 1,131 6,465 Accrued retirement benefits, net of current portion 38,599-38, Long-term debt, net of current portion 60,082-60, Malpractice and other insurance liabilities, net of current portion 19,939-19, Other long-term liabilities 8,228-7,174-1,054 Total liabilities 177,763 (3,934) 172,625 1,206 7,866 Commitments and contingencies Net assets: Unrestricted 157, ,722 3,698 8,605 Temporarily restricted 18,948-4,555 14,393 - Permanently restricted 7, ,137 - Total net assets 183, ,187 24,228 8,605 Total liabilities and net assets $360,783 ($3,934) $322,812 $25,434 $16,471 8

10 Consolidating Statement of Operations For the Six Months Ended June 30, 2016 (Unaudited and In Thousands) Phelps Northern Northwell Memorial Westchester The Feinstein Other Northwell Health Hospital Hospital Hospice Institute for Northwell Northwell Regional Health Endoscopy Northwell Health, Inc. Obligated Association Association Peconic Bay The Long Care Medical Health Health Insurance Dolan Family Insurance Center of Garden City South Shore Health Total Eliminations Group and Subsidiaries and Subsidiaries Medical Center (*) Island Home Network Research Foundation Laboratories Company Health Center Companies Long Island SurgiCenter Surgery Center Entities Operating revenue: Net patient service revenue $3,732,766 ($59,099) $3,339,235 $110,897 $128,918 $73,721 $57,999 $23,321 $38 $- $- $- $2,280 $- $8,657 $4,321 $3,259 $39,219 Physician practice revenue 620,731 (22,744) 478,809 13,660 4,673 2,017 1, ,203 Provision for bad debts (60,842) 9 (51,941) (930) (2,576) (1,431) (1,098) (105) - - (455) - (1) (2,314) Total patient revenue, net of provision for bad debts 4,292,655 (81,834) 3,766, , ,015 74,307 58,014 23, (455) - 2,279-8,657 4,321 3, ,108 Other operating revenue 248,162 (317,361) 249,569 4,346 3,127 1, , ,433 6,097 1,066 5, ,954 Net health insurance premium revenue 253,543 (275) , Net assets released from restrictions used for operations 28,516-19, , Total operating revenue 4,822,876 (399,470) 4,035, , ,471 76,247 58,259 23,640 31, ,978 6,097 3, ,836 8,657 4,321 3, ,062 Operating expenses: Salaries 2,302,818 (34,130) 1,925,613 64,807 55,875 30,781 33,753 9,650 27,496-37,564-1,989 14, , ,901 Employee benefits 606,410 (20,617) 515,967 19,073 16,381 8,613 11,507 2,523 8,617-12, , ,266 Supplies and expenses 1,588,742 (341,375) 1,233,470 34,777 47,762 31,644 12,092 10,382 13, ,713 6,097 1, ,577 2,514 2,002 1, ,406 Depreciation and amortization 203, ,185 5,469 5,692 2,614 1, , ,813 Interest 54,860 (288) 51, , Total operating expenses 4,756,393 (396,410) 3,907, , ,588 74,826 59,596 22,721 52, ,936 6,097 4, ,606 3,724 3,332 2, ,386 Excess (deficiency) of operating revenue over operating expenses 66,483 (3,060) 127,812 3,393 7,883 1,421 (1,337) 919 (21,026) - 10,042 - (560) (47,770) 4, ,168 (18,324) Non-operating gains and losses: Investment income 16,442-15, (21) (33) (13) (11) (5) (29) Change in net unrealized gains and losses and change in value of equity method investments 50,862-43, (654) (23) - 5, Change in interest in acquired entities - (29,220) 30, (1,468) Change in fair value of interest rate swap agreements designated as derivative instruments Contribution received in the acquisition of Peconic Bay Medical Center 36,370-36, Other non-operating gains and losses (4,319) - 1, (143) (6,512) Total non-operating gains and losses 99,545 (29,220) 128, (606) 27 1, (6,556) (33) 5, (13) (11) (5) (1,345) Excess (deficiency) of revenue and gains and losses over expenses 166,028 (32,280) 256,658 4,105 8, (1,310) 2,072 (21,009) (6,556) 10,009 5,335 (560) (46,857) 4, ,163 (19,669) Net assets released from restrictions for capital asset acquisitions 24,573-23, Change in fair value of interest rate swap agreements designated as cash flow hedges (776) (1,010) (158) Recovery of fair value of endowment corpus Transfers (to) from affiliates - 3,060 (110,558) - 15, ,387 6,000 (3,060) , ,071 Other changes in net assets (3,280) 4,903 - (181) (550) (5,100) (813) (685) (976) Increase (decrease) in unrestricted net assets $187,047 ($24,317) $170,528 $3,947 $23,214 ($73) ($1,468) $2,072 $336 ($498) $6,949 $5,335 ($560) $9,693 ($180) $165 $478 ($8,574) (*) Peconic Bay Medical Center's operating results above are from the January 15, 2016 acquisition date. 9

11 Combining Statement of Operations - Northwell Health Obligated Group For the Six Months Ended June 30, 2016 (Unaudited and In Thousands) Long Island Northwell Health Total North Shore Jewish Staten Island Huntington Stern Family Obligated Northwell University Medical University Lenox Hill Southside Hospital Glen Cove Plainview Forest Hills Franklin Center for Group Eliminations Healthcare, Inc. Hospital Center (*) Hospital Hospital Hospital Association Hospital Hospital Hospital (*) Hospital (*) Rehabilitation Operating revenue: Net patient service revenue $3,339,235 ($209) $- $859,908 $1,007,217 $446,035 $468,874 $212,480 $159,283 $49,916 $92,697 $8,779 $6,810 $27,445 Physician practice revenue 478, , , ,211 41,135 31,216 8,485 11, Provision for bad debts (51,941) 3,239 - (19,486) (15,214) (4,296) (7,119) (3,812) (2,274) (845) (1,130) (514) (276) (214) Total patient revenue, net of provision for bad debts 3,766,103 3,030-1,031,918 1,151, , , , ,225 57, ,573 9,033 7,057 27,687 Other operating revenue 249,569 (546,720) 498, ,870 67,872 10,855 64,564 8,221 3,004 2,308 4, Net assets released from restrictions used for operations 19, ,774 8,965-3, Total operating revenue 4,035,570 (543,690) 499,380 1,174,562 1,228, , , , ,273 59, ,999 9,129 7,212 27,943 Operating expenses: Salaries 1,925,613 (185,886) 171, , , , , ,100 89,832 35,499 51,658 4,844 3,807 15,636 Employee benefits 515,967 (43,110) 46, , ,941 66,372 68,927 36,756 25,620 9,374 17,162 1,622 1,243 5,810 Supplies and expenses 1,233,470 (314,694) 215, , , , ,267 83,831 62,734 17,406 32,344 2,621 1,893 5,780 Depreciation and amortization 181,185-45,890 30,947 46,570 14,305 21,718 7,268 7,815 3,256 2, Interest 51,523-19,070 3,063 21,801 2,430 2,559 1, Total operating expenses 3,907,758 (543,690) 498,368 1,117,623 1,190, , , , ,938 65, ,587 9,418 7,145 28,093 Excess (deficiency) of operating revenue over operating expenses 127,812-1,012 56,939 37,697 23,133 6,446 1,035 4,335 (5,825) 3,412 (289) 67 (150) Non-operating gains and losses: Investment income 15,933-1,738 5,337 4,523 3, (27) (1) (1) 64 Change in net unrealized gains and losses and change in value of equity method investments 43,936-6,503 13,933 10,981 6, ,147 1, Change in interest in acquired entities 30,688 (11,471) 38,110 4, Change in fair value of interest rate swap agreements designated as derivative instruments Contribution received in the acquisition of Peconic Bay Medical Center 36,370-36, Other non-operating gains and losses 1, ,500 (2,771) Total non-operating gains and losses 128,846 (11,471) 82,721 23,319 20,004 7,425 1, ,594 2,006 (27) (1) Excess (deficiency) of revenue and gains and losses over expenses 256,658 (11,471) 83,733 80,258 57,701 30,558 7,485 1,150 7,929 (3,819) 3,385 (290) 67 (28) Net assets released from restrictions for capital asset acquisitions 23, , , Change in fair value of interest rate swap agreements designated as cash flow hedges Recovery of fair value of endowment corpus Transfers (to) from affiliates (110,558) - (90,413) (11,011) (62,152) ,837 49,181 - Increase (decrease) in unrestricted net assets $170,528 ($11,471) ($6,680) $70,174 $14,770 $30,780 $11,471 $1,151 $8,000 ($3,819) $3,385 $3,547 $49,248 ($28) (*) Effective January 14, 2016, Forest Hills Hospital and Franklin Hospital merged into Long Island Jewish Medical Center. As such, the Forest Hills Hospital and Franklin Hospital columns above only reflect the results of operations through January 13, Beginning January 14, 2016, the operating results of these hospitals are included with the Long Island Jewish Medical Center column. 10

12 Consolidating Statement of Operations - Phelps Memorial Hospital For the Six Months Ended June 30, 2016 (Unaudited and In Thousands) Phelps Memorial Hospital Phelps Memorial Phelps Phelps Association and Hospital Professional Medical Subsidiaries Eliminations Association Building Co. Associates Operating revenue: Net patient service revenue $110,897 $- $110,897 $- $- Physician practice revenue 13,660-5,338-8,322 Provision for bad debts (930) - (929) (1) Total patient revenue, net of provision for bad debts 123, ,306-8,321 Other operating revenue 4,346 (1,175) 4,247 1, Net assets released from restrictions used for operations Total operating revenue 128,188 (1,175) 119,768 1,050 8,545 Operating expenses: Salaries 64,807-54,911-9,896 Employee benefits 19,073-16,738-2,335 Supplies and expenses 34,777 (1,175) 32, ,802 Depreciation and amortization 5,469-5, Interest Total operating expenses 124,795 (1,175) 110, ,033 Excess (deficiency) of operating revenue over operating expenses 3,393-9, (6,488) Non-operating gains and losses: Investment income Change in net unrealized gains and losses and change in value of equity method investments Other non-operating gains and losses Total non-operating gains and losses Excess (deficiency) of revenue and gains and losses over expenses 4,105-10, (6,488) Net assets released from restrictions for capital asset acquisitions Other changes in net assets (181) (627) - Increase (decrease) in unrestricted net assets $3,947 $446 $10,257 ($268) ($6,488) 11

13 Consolidating Statement of Operations - Northern Westchester Hospital For the Six Months Ended June 30, 2016 (Unaudited and In Thousands) Northern Westchester Northern Northern Hospital Westchester Westchester Association and Hospital Hospital Center Other Subsidiaries Association Foundation Subsidiaries Operating revenue: Net patient service revenue $128,918 $128,918 $- $- Physician practice revenue 4,673 4, Provision for bad debts (2,576) (2,576) - - Total patient revenue, net of provision for bad debts 131, , Other operating revenue 3,127 2, Net assets released from restrictions used for operations Total operating revenue 134, , Operating expenses: Salaries 55,875 55,868-7 Employee benefits 16,381 16, Supplies and expenses 47,762 47, Depreciation and amortization 5,692 5, Interest Total operating expenses 126, , Excess (deficiency) of operating revenue over operating expenses 7,883 8,021 - (138) Non-operating gains and losses: Investment income 41 (196) Change in net unrealized gains and losses and change in value of equity method investments Other non-operating gains and losses (143) 80 (223) - Total non-operating gains and losses (223) 237 Excess (deficiency) of revenue and gains and losses over expenses 8,214 8,338 (223) 99 Transfers from affiliates 15,000 15, Increase (decrease) in unrestricted net assets $23,214 $23,338 ($223) $99 12

14 Northwell Health Obligated Group Utilization Statistics Six Months Ended June 30, Inpatient Discharges (excl. Nursery) 123, ,190 Patient Days (excl. Nursery) 708, ,340 Average Length of Stay (in Days) Average Daily Census 3,915 3,925 Licensed Beds (excl. Nursery) 5,435 5,415 Beds Available (excl. Nursery) (1) 4,516 4,496 Occupancy Percentage (1) 86.1% 87.1% Normal Newborn Discharges 12,176 12,573 Total Discharges 135, ,763 Outpatient Emergency Room Visits 274, ,817 Emergency Room Admissions 81,622 83,450 Total ER Encounters 356, ,267 Health Center Visits 433, ,368 Ambulatory Surgery Visits 71,149 71,876 Home Care Admissions 16,068 17,959 Other Outpatient Visits and Encounters (2) 545, ,655 (1) Beds Available, which vary primarily based upon need, are reported as the number of beds at the end of each reporting period. Occupancy Percentage is calculated using the average beds available for the reporting period. (2) The increase in Other Outpatient Visits and Encounters is primarily due to the expansion of radiology and imaging services within the Obligated Group, including the opening of new imaging centers. NOTE: The utilization statistics presented above only include members of Northwell Health that are in the Obligated Group. 13

15 Northwell Health Obligated Group Payer Mix Percent of Gross Revenue (Inpatient & Outpatient) Six Months Ended June 30, Medicare (1) 43% 42% Medicaid (2) 20% 21% Commercial 31% 31% Self Pay 2% 2% Other 4% 4% Total 100% 100% (1) Includes Medicare Managed Care. (2) Includes Medicaid Managed Care. NOTE: The payer mix information presented above only includes members of Northwell Health that are in the Obligated Group. 14

16 Notes to Consolidated Financial Statements June 30, 2016 (information pertaining to the six months ended June 30, 2016 and 2015 is unaudited) (in thousands) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles applied on a basis consistent with that of the 2015 audited consolidated financial statements of Northwell Health, Inc. and its member corporations and other affiliated entities (collectively, Northwell ). Northwell presumes that users of this interim financial information have read or have access to Northwell s audited consolidated financial statements and that the adequacy of additional disclosures needed for a fair presentation may be determined in that context. The audited consolidated financial statements of Northwell for the years ended December 31, 2015 and 2014 are on file with the Municipal Securities Rulemaking Board and are accessible through its Electronic Municipal Market Access database. Information contained in Northwell s audited consolidated financial statements for the years ended December 31, 2015 and 2014 is incorporated herein. Footnotes and other disclosures that would substantially duplicate the disclosures contained in Northwell s most recent audited consolidated financial statements have been omitted. Accordingly, the accompanying unaudited interim consolidated financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all transactions considered necessary for a fair presentation have been included. Patient volumes and net operating revenue and results are subject to seasonal and other variations caused by a number of factors. Monthly and periodic operating results are not necessarily representative of operations for a full year for various reasons, including occupancy levels and other patient volumes, interest rates, unusual or infrequent items and other seasonal fluctuations. These same considerations apply to year-to-year comparisons. Northwell is an integrated health care delivery system in the New York metropolitan area. Various entities within Northwell are exempt from Federal income taxes under the provisions of Section 501(a) of the Internal Revenue Code (the Code ) as organizations described in Section 501(c)(3), while other entities are not exempt from such income taxes. The exempt organizations are also exempt from New York State and local income taxes. The effect of income taxes is not material to the unaudited interim consolidated financial statements. 15

17 Notes to Consolidated Financial Statements (continued) (information pertaining to the six months ended June 30, 2016 and 2015 is unaudited) (in thousands) Note A - Basis of Presentation (continued) The accompanying unaudited interim consolidated financial statements include the accounts of the following principal operating organizations. All interorganization accounts and activities have been eliminated in consolidation. Hospitals North Shore University Hospital ( NSUH ), including the accounts of Syosset Hospital Long Island Jewish Medical Center ( LIJMC ), including Long Island Jewish Hospital, Long Island Jewish Forest Hills, Long Island Jewish Valley Stream, Steven and Alexandra Cohen Children s Medical Center of New York, Zucker Hillside Hospital and Orzac Center for Rehabilitation Staten Island University Hospital ( Staten Island ) Lenox Hill Hospital ( Lenox ) Other Entities Northwell Health, Inc. and Northwell Healthcare, Inc. ( HCI ) parent holding companies Northwell Health Stern Family Center for Rehabilitation ( Stern ) skilled nursing facility and rehabilitation center Broadlawn Manor Nursing and Rehabilitation Center (part of The Long Island Home) skilled nursing facility and rehabilitation center North Shore Health System Enterprises, Inc. and North Shore Health Enterprises, Inc. holding companies for certain for-profit related entities RegionCare, Inc. infusion therapy, nurse staffing and licensed home health agency services North Shore Community Services, Inc. real estate holdings and related services North Shore University Hospital Housing, Inc., North Shore University Hospital at Glen Cove Housing, Inc. and Hillside Hospital Houses, Inc. housing and auxiliary facilities for staff members, students and employees Endoscopy Center of Long Island, LLC outpatient endoscopy center 70% owned by Northwell North Shore Medical Accelerator, P.C. outpatient radiation oncology center 70% owned by Northwell North Shore-LIJ and Yale New Haven Medical Air Transport, LLC medical air transport company 90% owned by Northwell Southside Hospital ( Southside ) Glen Cove Hospital ( Glen Cove ) Huntington Hospital Association ( Huntington ) Plainview Hospital ( Plainview ) South Oaks Hospital (part of The Long Island Home) Phelps Memorial Hospital Association Northern Westchester Hospital Association Peconic Bay Medical Center Northwell Health Laboratories laboratory services The Feinstein Institute for Medical Research medical research Northwell Health Foundation, Inc. fundraising Hospice Care Network, Inc. hospice services North Shore-LIJ Health Plan Inc. tax-exempt health insurance entity authorized by the State of New York to operate a Medicaid Managed Long- Term Care Plan and a Fully Integrated Dual Advantage Plan North Shore-LIJ CareConnect Insurance Company Inc. for-profit health insurance entity licensed to issue commercial health insurance products in the State of New York Regional Insurance Company Ltd. captive insurance company providing excess professional liability insurance Huntington Hospital Dolan Family Health Center community health center Endo Group, LLC (d/b/a Garden City SurgiCenter ) outpatient ambulatory surgery 70% owned by Northwell Northwell Health GoHealth Urgent Care urgent care centers 90% owned by Northwell South Shore Surgery Center, LLC outpatient ambulatory surgery 50.1% owned by Northwell Other affiliated professional corporations 16

18 Notes to Consolidated Financial Statements (continued) (information pertaining to the six months ended June 30, 2016 and 2015 is unaudited) (in thousands) Note A - Basis of Presentation (continued) Certain members of Northwell (the Obligated Group ) are jointly and severally liable for obligations under bond indentures. The Obligated Group consists of HCI, NSUH, LIJMC, Staten Island, Lenox, Southside, Huntington, Glen Cove, Plainview and Stern. Effective January 14, 2016, Forest Hills Hospital and Franklin Hospital merged into LIJMC. In conjunction with the merger, the names of the hospitals were changed to Long Island Jewish Forest Hills and Long Island Jewish Valley Stream, respectively. Northwell maintains a controlling ownership in various entities whose results of operations are included in the accompanying consolidated financial statements. Northwell s non-controlling interest in these entities at June 30, 2016 and 2015 is immaterial, both individually and in the aggregate, to Northwell s net assets and excess of revenue and gains and losses over expenses as reported in the accompanying consolidated financial statements. Note B - Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, including estimated accounts receivable for services to patients, and liabilities, including estimated payables to third-party payers, accrued retirement benefits, and malpractice and other insurance liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Note C Recent Accounting Standards In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. ( ASU ) , Not-for-Profit Entities. ASU requires changes to the current presentation of financial statements of not-for-profit entities. The provisions of ASU are effective for annual reporting periods beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, Early application is permitted. Northwell has not completed the process of evaluating the impact of ASU on its consolidated financial statements. Note D Acquisitions On January 15, 2016 (the 2016 Acquisition Date ), Northwell acquired Peconic Bay Medical Center ( Peconic ), a not-for-profit corporation that operates a 140 bed acute care hospital and a skilled nursing/rehabilitation center located in eastern Suffolk County, New York. Northwell acquired Peconic by means of an inherent contribution where no consideration was transferred by Northwell. Northwell is accounting for the business combination by applying the acquisition method, and accordingly, the inherent contribution is valued as the excess of the fair value of assets acquired over the fair value of liabilities assumed. Northwell is in the process of finalizing 17

19 Notes to Consolidated Financial Statements (continued) (information pertaining to the six months ended June 30, 2016 and 2015 is unaudited) (in thousands) Note D Acquisitions (continued) an independent valuation of the assets and liabilities of Peconic and, as a result, has recognized estimated provisional values of Peconic s assets and liabilities in the accompanying unaudited interim consolidated statement of financial position as of June 30, The results of Peconic s operations have been included in the unaudited interim consolidated financial statements since the 2016 Acquisition Date. Peconic is not a member of the Obligated Group. The following table summarizes the estimated provisional, unaudited fair values of the assets acquired and liabilities assumed at the 2016 Acquisition Date: January 15, 2016 Assets Cash and cash equivalents $ 19,100 Marketable securities and other investments 4,223 Accounts receivable for services to patients 13,027 Accounts receivable for physician activities 747 Other current assets 15,572 Assets limited as to use 7,038 Pledges receivable, net 1,000 Property, plant and equipment 79,656 Other assets 5,939 Total assets acquired 146,302 Liabilities Accounts payable and accrued expenses 22,008 Accrued salaries and related benefits 8,892 Estimated payable to third-party payers 7,711 Accrued retirement benefits 4,021 Capital lease obligations 4,645 Long-term debt 37,028 Malpractice and other insurance liabilities 11,097 Other long-term liabilities 11,245 Total liabilities assumed 106,647 Excess of assets acquired over liabilities assumed $ 39,655 Net assets acquired Unrestricted $ 36,370 Temporarily restricted 2,498 Permanently restricted 787 $ 39,655 The finalization of the fair value of assets and liabilities as of the 2016 Acquisition Date is pending the review of valuation results conducted by third-party experts and other procedures. 18