The New York and Presbyterian Hospital As of and For the Nine Months Ended September 30, 2017

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1 U NAUDITED C ONSOLIDATED F INANCIAL S TATEMENTS AND S UPPLEMENTARY INFORMATION The New York and Presbyterian Hospital As of and For the Nine Months Ended September 30, 2017

2 The New York and Presbyterian Hospital Unaudited Consolidated Financial Statements and Supplementary Information As of and For the Nine Months Ended September 30, 2017 CONTENTS Unaudited Consolidated Financial Statements Unaudited Consolidated Statements of Financial Position...1 Unaudited Consolidated Statements of Operations Unaudited Consolidated Statements of Changes in Net Assets...4 Unaudited Consolidated Statements of Cash Flows...5 Notes to Unaudited Consolidated Financial Statements...6 Supplementary Information Unaudited Consolidating Statement of Financial Position...20 Unaudited Consolidating Statement of Operations...22

3 The New York and Presbyterian Hospital Unaudited Consolidated Statements of Financial Position (In Thousands) (Unaudited) (Audited) September 30 December Assets Current assets: Cash, cash equivalents and short-term investments: Cash and cash equivalents $ 324,952 $ 462,754 Short-term investments 1,999,141 1,680,559 Total cash, cash equivalents and short-term investments 2,324,093 2,143,313 Patient accounts receivable, less allowance for uncollectibles (2017 $332,938; 2016 $306,404) 893, ,059 Other current assets 260, ,764 Assets limited as to use current portion 80,077 75,469 Professional liabilities insurance recoveries receivable and related deposit current portion 82,740 86,902 Beneficial interest in net assets held by related organizations current portion 66,331 68,974 Total current assets 3,706,603 3,365,481 Assets limited as to use noncurrent 3,078,911 3,067,058 Property, buildings, and equipment net 4,226,893 3,669,769 Other noncurrent assets net 41,524 26,710 Professional liabilities insurance recoveries receivable and related deposit noncurrent 252, ,209 Beneficial interest in net assets held by related organizations noncurrent 2,021,855 1,697,674 Total assets $ 13,328,431 $ 12,059,901 Continued on following page. 1

4 The New York and Presbyterian Hospital Unaudited Consolidated Statements of Financial Position (continued) (In Thousands) (Unaudited) (Audited) September 30 December Liabilities and net assets Current liabilities: Long-term debt current portion $ 69,679 $ 66,352 Accounts payable and accrued expenses 659, ,511 Accrued salaries and related liabilities 375, ,042 Pension and postretirement benefit liabilities - current portion 22,842 22,842 Professional liabilities and other insurance liabilities current portion 129, ,499 Other current liabilities 226, ,064 Due to related organizations net 4,813 18,603 Total current liabilities 1,488,734 1,425,913 Long-term debt 2,765,518 2,542,287 Professional liabilities and other insurance liabilities 634, ,623 Pension liability 241, ,916 Postretirement benefit liability 57,316 56,734 Deferred revenue 1,128 1,509 Other noncurrent liabilities 560, ,198 Total liabilities 5,749,474 5,455,180 Commitments and contingencies Net assets: Unrestricted 5,431,800 4,782,099 Temporarily restricted 1,871,872 1,553,698 Permanently restricted 275, ,924 Total net assets 7,578,957 6,604,721 Total liabilities and net assets $ 13,328,431 $ 12,059,901 See accompanying notes. 2

5 The New York and Presbyterian Hospital Unaudited Consolidated Statements of Operations (In Thousands) (Unaudited) Nine Months Ended September (As Adjusted) Operating revenues Net patient service revenue $ 5,819,284 $ 5,356,065 Provision for bad debts (107,001) (103,312) Net patient service revenue, less provision for bad debts 5,712,283 5,252,753 Other revenue 285, ,792 Total operating revenues 5,997,927 5,529,545 Operating expenses Salaries and wages 2,712,190 2,518,587 Employee benefits 776, ,524 Supplies and other expenses 1,845,687 1,721,505 Interest and amortization of deferred financing fees 73,379 64,810 Depreciation and amortization 268, ,211 Total operating expenses 5,675,718 5,267,637 Operating income 322, ,908 Investment return 311, ,266 Excess of revenues over expenses 633, ,174 Other changes in unrestricted net assets: Net asset transfers to related parties (3,849) (4,972) Net assets released from restrictions for the purchase of fixed assets 1,025 2,196 Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 53,982 74,499 Change in pension and postretirement benefit liabilities to be recognized in future periods (34,820) (104,380) Change in unrestricted net assets $ 649,701 $ 392,517 See accompanying notes. 3

6 The New York and Presbyterian Hospital Unaudited Consolidated Statements of Changes in Net Assets (In Thousands) Beneficial Interest in Temporarily and Permanently Restricted Net Assets Held by Related Organizations Total Temporarily Permanently Plant Specific Endowment Temporarily Permanently Total Unrestricted Restricted Restricted Replacement Purpose Earnings Restricted Restricted Net Assets (Unaudited) Net assets at January 1, 2016, as adjusted $ 4,147,857 $ 34,133 $ 22,051 $ 753,154 $ 540,439 $ 193,049 $ 1,486,642 $ 246,966 $ 5,937,649 Change in unrestricted net assets 392, ,517 Restricted investment return and other - 2, ,706 Net assets released from restriction for the purchase of fixed assets (2,196) (2,196) Changes in beneficial interest in net assets held by related organizations ,715 (24,494) (87) (19,866) (2,192) (22,058) Change in net assets 392, ,715 (24,494) (87) (19,866) (2,192) 370,969 Net assets at September 30, 2016, as adjusted $ 4,540,374 $ 34,543 $ 22,151 $ 757,869 $ 515,945 $ 192,962 $ 1,466,776 $ 244,774 $ 6,308,618 Net assets at January 1, 2017 $ 4,782,099 $ 33,923 $ 22,051 $ 784,233 $ 540,897 $ 194,645 $ 1,519,775 $ 246,873 $ 6,604,721 Change in unrestricted net assets 649, ,701 Restricted investment return and other - 4, ,022 Net assets released from restriction for the purchase of fixed assets (1,025) (1,025) Changes in beneficial interest in net assets held by related organizations , ,953 19, ,178 6, ,538 Change in net assets 649,701 2, , ,953 19, ,178 6, ,236 Net assets at September 30, 2017 $ 5,431,800 $ 36,919 $ 22,052 $ 850,170 $ 770,850 $ 213,933 $ 1,834,953 $ 253,233 $ 7,578,957 See accompanying notes. 4

7 The New York and Presbyterian Hospital Unaudited Consolidated Statements of Cash Flows (In Thousands) Unaudited Nine Months Ended September (As Adjusted) Operating activities Change in net assets $ 974,236 $ 370,969 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 268, ,211 Amortization of deferred financing costs, mortgage discount and other 2,963 3,103 Distribution from New York-Presbyterian Fund, Inc. for the purchase of fixed assets (53,982) (74,499) Equity in earnings of common collective/commingled trusts and alternative investments (132,346) (54,334) Net realized (gains) losses on sales of investment companies (17,851) 17,222 Change in unrealized gains (77,936) (72,471) Change in interest in pooled investments held by New York-Presbyterian Fund, Inc. (1,180) (715) Equity in income from investee (4,443) (3,024) Permanently restricted contributions - (100) Net asset transfers to related parties 3,849 4,972 Change in operating assets and liabilities: Patient accounts receivable (82,230) (22,077) Other assets (114,850) (21,392) Beneficial interest in net assets held by related organizations (321,538) 22,059 Accounts payable and accrued expenses 75,768 45,782 Accrued salaries and related liabilities 16,709 10,590 Due to/from related organizations-net (12,621) 3,585 Other liabilities 38,055 14,387 Professional liabilities and other and related insurance recoveries receivable (1,369) (1,415) Pension and post retirement benefit liabilities (62,528) 52,173 NET CASH PROVIDED BY OPERATING ACTIVITIES 496, ,026 Investing activities Net purchases of investments and assets limited as to use (105,730) (815,528) Acquisitions of property, buildings, and equipment (544,431) (524,552) Distributions from investee 7,000 3,911 NET CASH USED IN INVESTING ACTIVITIES (643,161) (1,336,169) Financing activities Repayments of long-term debt (40,564) (70,749) Proceeds from issuance of long-term debt - 850,000 Payment of deferred financing costs (1,007) (8,016) Permanently restricted contributions Net asset transfer to related party (3,849) (4,972) Distributions from New York-Presbyterian Fund Inc. for the purchase of fixed assets 53,982 74,499 NET CASH PROVIDED BY FINANCING ACTIVITIES 8, ,862 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (137,802) 54,719 Cash and cash equivalents at beginning of period 462, ,306 Cash and cash equivalents at end of period $ 324,952 $ 461,025 Supplemental disclosure of cash flow information Assets acquired under capital lease obligations $ 26,517 $ 17,973 Purchase of leasehold condominum interest with promissory note payable in 2017 $ 254,267 $ - See accompanying notes. 5

8 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements September 30, Organization and Summary of Significant Accounting Policies Financial Statements The New York and Presbyterian Hospital (the Hospital) presumes that users of this unaudited consolidated financial information intended for quarterly reporting purposes have read or have access to the Hospital s audited consolidated financial statements which include certain disclosures required by U.S. generally accepted accounting principles. The audited financial statements of the Hospital for the years ended December 31, 2016 and 2015 are on file with the Municipal Securities Rulemaking Board and are accessible through its Electronic Municipal Market Access Database (EMMA). Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures contained in the Hospital s most recent financial statements have been omitted from the unaudited consolidated financial information. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of the periods have been included in the accompanying unaudited consolidated financial statements. All such adjustments are considered by management to be of a normal, recurring nature, except as noted otherwise. Certain amounts pertaining to the Hospital and its subsidiaries have been reflected in the accompanying unaudited consolidated and consolidating financial information based on amounts available as of the filing date of this unaudited consolidated information and are recorded based on annual estimates, are only updated annually, or are projected for interim financial reporting purposes; however, such amounts and estimates are subject to change and are reevaluated by the Hospital quarterly and on an annual basis. Organization and Basis of Presentation: The accompanying consolidated financial statements include the accounts of The New York and Presbyterian Hospital (as an entity separate from its subsidiaries, NYPH), NYP Community Services, Inc. (Community Services) and NYP Community Programs, Inc. (Community Programs). NYPH is the sole member of Community Services and Community Programs. The reporting entity resulting from the consolidation of these entities is referred to herein as the Hospital. All significant intercompany balances and transactions have been eliminated in consolidation. NYPH is a tax-exempt organization that was incorporated under New York State not-for-profit corporation law. NYPH is a major academic medical center, providing a full range of inpatient and outpatient services, mainly to residents of the New York metropolitan area. The Board of Trustees of NYPH consists of persons who have first been elected as members of New York-Presbyterian Foundation, Inc. (Foundation, Inc.), a New York State not-for-profit corporation. Foundation, Inc. is related to a number of organizations. 6

9 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 1. Organization and Summary of Significant Accounting Policies (continued) NYP Community Programs serves as the active parent organization for the New York Presbyterian Regional Hospital Network, which currently consists of NewYork-Presbyterian/Lawrence Hospital ( NYP/Lawrence Hospital ), Hudson Valley Hospital Center (d/b/a NYP/Hudson Valley Hospital), NewYork-Presbyterian Hospital/Queens ( NYP/Queens ) and NewYork-Presbyterian/Brooklyn Methodist Hospital ( NYP/Brooklyn Methodist ), collectively the Regional Hospitals. Prior to December 6, 2016, the active parent of NYP/Lawrence Hospital was NYP Community Services, Inc. As of that date, NYP Community Programs became the active parent of NYP/Lawrence Hospital. In September 2017, NYPH filed a certificate of need application to the New York State Department of Health seeking approval for a merger of NYP/Lawrence Hospital into the Hospital, with the Hospital receiving all assets and liabilities of NYP/Lawrence Hospital. In addition, NYPH requested the approval of the disestablishment of NYP Community Programs, Inc. as the active parent of NYP/Lawrence Hospital. NYPH expects such approvals will be granted during 2017 or the first quarter of This change, if approved, is not expected to impact the Hospital s consolidated financial statements. The New York Methodist Hospital Acquisition: On December 6, 2016 (the Brooklyn Methodist Acquisition Date), sole membership of The New York Methodist Hospital and its controlled affiliates was transferred to NYP Community Programs. NYP Community Programs became the entity s active parent and renamed it NewYork-Presbyterian/Brooklyn Methodist (referred to herein as Brooklyn/Methodist or NYP/Brooklyn Methodist). NYP/Brooklyn Methodist consists of a 591-bedacute care hospital located in Kings County, New York, several physician practice entities, a management service organization (MSO) and certain other entities. As NYP/Brooklyn Methodist and NYPH were entities under common control as of the Brooklyn/Methodist Acquisition Date, the change in control was accounted for in a manner similar to a pooling of interests with retrospective adjustment in prior period financial statements for the period in which the entities were under common control. Therefore, the accompanying unaudited consolidated financial statements as of and for the nine months ended September 30, 2017 and 2016 reflect the financial position, operations, changes in net assets and cash flows of the Hospital, including NYP/Brooklyn Methodist, as if the acquisition had been completed on January 1, 2015; all relevant disclosures have been adjusted. The audited financial statements of NYP/Brooklyn Methodist for the years ended December 31, 2016 and 2015 are on file with the Municipal Securities Rulemaking Board and are accessible through EMMA Database. A summary of significant accounting policies follows: 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, such as estimated uncollectibles for accounts receivable for services to patients, valuation of alternative investments, and liabilities, such as estimated settlements with third-party payors, professional insurance liabilities, and pension and postretirement benefits liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated financial statements. 7

10 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 1. Organization and Summary of Significant Accounting Policies (continued) Estimates also affect the amounts of revenue and expenses reported during the period. There is at least a reasonable possibility that certain estimates will change by material amounts in the near term. Actual results could differ from those estimates. Net Patient Service Revenue Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payors and others for services rendered and includes estimated retroactive revenue adjustments due to ongoing and future audits, reviews and investigations. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are provided, and such amounts are adjusted in future periods as adjustments become known or as years are no longer subject to such audits, reviews and investigations. The Hospital has agreements with third-party payors that provide for payment for services rendered at amounts different from its established rates. The notes to the audited consolidated financial statements of the Hospital for the years ended December 31, 2016 and 2015, include additional disclosures which describe the Hospital s accounting for net patient service revenue and related matters. 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 the accompanying consolidated financial statements and believes that it is in compliance with all applicable laws and regulations, except for the matter disclosed in Note 12 of the Hospital s December 31, 2016 audited consolidated financial statements. There are various proposals at the federal and state levels that could, among other things, significantly reduce payment rates or modify payment methods. The ultimate outcome of these proposals and other market changes, including the potential effects of or revisions to health care reform that has been enacted by the federal government, cannot be determined presently. Future changes in the Medicare and Medicaid programs and any reduction of funding could have an adverse impact on the Hospital. Additionally, certain payors payment rates for various years have been appealed by the Hospital. If the appeals are successful, additional income applicable to those years could be realized. For the nine months ended September 30, 2017 and 2016, the net effect of the Hospital s revisions to prior year estimates resulted in net patient service revenue increasing by approximately $64.7 million and $23.6 million, respectively. 8

11 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 1. Organization and Summary of Significant Accounting Policies (continued) Investments Investments consist of money market funds, fixed income securities (including U.S. government bonds, non-u.s. government bonds, agency notes, mortgage and asset backed and corporate bonds), equity securities (including readily tradeable stocks, exchange traded funds and mutual funds), real asset investments (including individual investments and mutual funds invested in natural resources, energy and commodities), interests in common collective/commingled trusts and alternative investments (including hedge funds, investments in private equity firms and real asset funds). All investments (excluding interests in common collective/commingled trusts and alternative investments) are carried at fair value based on quoted market prices and are classified as trading investments. Alternative investment interests generally are structured such that the Hospital holds a limited partnership interest or an interest in an investment management company. The Hospital s ownership structure does not provide for control over the related investees and the Hospital s financial risk is limited to the carrying amount reported for each investee, in addition to any unfunded capital commitment. Individual investment holdings within the alternative investments include non-marketable and markettraded debt, equity and real asset securities and interests in other alternative investments. The Hospital may be exposed indirectly to securities lending, short sales of securities and trading in futures and forward contracts, options and other derivative products. Alternative investments often have liquidity restrictions under which the Hospital s capital may be divested only at specified times. Alternative investments, excluding those held in the Hospital s defined benefit plans and interests in common collective/commingled trusts are reported in the accompanying unaudited consolidated statements of financial position based upon net asset values derived from the application of the equity method of accounting. Alternative investments held in the Hospital s defined benefit plans are stated at fair value, as estimated in an unquoted market. Fair value for alternative investments is determined for each investment using net asset values as a practical expedient, as permitted by generally accepted accounting principles, rather than using another valuation method to independently estimate fair value. Financial information used by the Hospital to evaluate its alternative investments is provided by the investment manager or general partner and includes fair value valuations (quoted market prices and values determined through other means) of underlying securities and other financial instruments held by the investee, and estimates that require varying degrees of judgment. The financial statements of the investee companies are audited annually by independent auditors, although the timing for reporting the results of such audits does not coincide with the Hospital s annual financial statement reporting. There is uncertainty in the accounting for alternative investments arising from factors such as lack of active markets (primary and secondary), lack of transparency into underlying holdings and time lags associated with reporting by the investee companies. As a result, there is at least a reasonable possibility that estimates will change in the near term. 9

12 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 1. Organization and Summary of Significant Accounting Policies (continued) Tax Status The majority of the entities comprising the Hospital are Section 501(c)(3) organizations exempt from Federal income taxes under Section 501(a) of the Internal Revenue Code. These entities are also exempt from New York State income taxes. NYPH, Community Services, Community Programs, NYP/Queens and NYP/Brooklyn Methodist are exempt from New York City income taxes. There are various subsidiaries of the Hospital that are for-profit entities. Taxable operations and the potential for income taxes from these entities and from unrelated business activities of the tax exempt entities are not significant to the accompanying consolidated financial statements. There are various proposals being considered as part of federal income tax reform efforts. The ultimate outcome of these proposals cannot be determined presently. 2. Pension and Similar Benefit Plans The Hospital provides pension and similar benefits to its employees through several plans, including various multi-employer plans for union employees and several defined benefit plans. Additionally, the Hospital has defined contribution pension plans for certain employees. The Hospital also has several postretirement benefit plans that provide certain health care and life insurance benefits to its employees. The Hospital funds the noncontributory defined benefit plans in accordance with the minimum funding requirement of the Employee Retirement Income Security Act of 1974 (ERISA), plus additional amounts that the Hospital may deem appropriate from time to time. Amounts contributed to the pension plans are based on actuarial valuations. The Hospital contributed $150.8 million and $108.5 million to its defined benefit pension plans for the nine months ended September 30, 2017 and 2016, respectively. The Hospital expects to contribute approximately $0.8 million to its pension plans for the remainder on The Hospital contributed $3.1 million and $3.0 million to its postretirement benefit plans for the nine months ended September 30, 2017 and 2016, respectively. The Hospital expects to contribute approximately $1.0 million to its postretirement benefit plans for the remainder of

13 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 2. Pension and Similar Benefit Plans (continued) The Hospital recognizes in its consolidated statements of financial position an asset, for a defined benefit postretirement plan s overfunded status, or a liability, for a plan s underfunded status; measures a defined benefit postretirement plan s assets and obligations that determine funded status as of the end of the Hospital s fiscal year; and recognizes the periodic change in the funded status of a defined benefit postretirement plan as a component of changes in unrestricted net assets in the year in which the change occurs. Amounts that are recognized as a component of changes in unrestricted net assets will be subsequently recognized as net periodic benefit cost. On a quarterly basis, NYPH management has elected to determine an interim discount rate and reports the change in pension and postretirement benefit liabilities to be recognized in future periods in its consolidated statement of operations. The interim discount rate estimates are subject to volatility from market interest rates and amounts reported on an interim basis are subject to change. Net periodic benefit cost consists of the following for the nine months ended September 30, 2017 and 2016 (in thousands): Postretirement Pension Plans Benefit Plans (As Adjusted) (As Adjusted) (Unaudited) (Unaudited) Service cost $ 65,221 $ 58,021 $ 1,906 $ 1,639 Interest cost 56,870 59,361 2,364 1,771 Expected return on plan assets (90,060) (93,667) Net amortization of prior service cost (606) (594) Recognized actuarial loss 21,324 26,974 1, Recognized actuarial loss due to settlement Net periodic pension cost and postretirement benefits cost $ 54,051 $ 51,292 $ 4,691 $ 3,697 11

14 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 3. Professional Liability Insurance Program In 1978, the Hospital, in conjunction with a number of unrelated health care entities, participated in the formation of captive insurance companies (collectively, the Captive) to provide professional liability and general liability insurance to its participants. The premiums are based on a modified claims-made coverage and are actuarially determined based on the actual experience of the Captive, Hospital-specific experience, and estimated current exposure. The Captive has reinsurance coverage from reinsurers for certain amounts above its coverage level per claim limits. Rights to equity in the Captive were transferred to New York-Presbyterian Fund, Inc. (Fund, Inc.), a related party. Accordingly, insurance premiums are paid by the Hospital initially to Fund, Inc. Effective July 1, 2013, August 1, 2014, February 1, 2015 and December 1, 2015, NewYork- Presbyterian/Lower Manhattan Hospital (NYP/LMH), NYP/Lawrence, NYP/Hudson Valley and NYP/Queens, respectively, became insured by the Captive. Prior to each entity s respective effective date with the Captive, the entities were covered by various self-insured, claims-made and excess insurance policies. NYP/Brooklyn Methodist participates in a separate captive insurance program, which includes certain self-insured retentions. The notes to the audited consolidated financial statements of the Hospital for the years ended December 31, 2016 and 2015, include additional disclosures which describe the Hospital s accounting for its professional liability insurance program and related matters. The Hospital s estimates for professional liabilities are based upon complex actuarial calculations which utilize factors such as historical claims experience for the Hospital and related industry factors, trending models, estimates for the payment patterns of future claims and present value discount factors. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. Revisions to estimated amounts resulting from actual experience differing from projected expectations are recorded in the period the information becomes known or when changes are anticipated. 4. Fair Value Measurements The Hospital uses various methods of calculating fair value of its financial assets and liabilities, when applicable. The Hospital defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a framework for measuring fair value. Fair value measurements are applied based on the unit of account from the Hospital s perspective. The unit of account determines what is being measured by reference to the level at which the asset or liability is aggregated (or disaggregated). The Hospital uses a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable inputs that are based on inputs not quoted in active markets, but corroborated by market data. 12

15 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. A financial instrument s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. In determining fair value, the Hospital uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers non-performance risk in its assessment of fair value. The following table presents financial instruments carried at fair value, excluding assets invested in the Hospital s pension plans, as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 (Unaudited) Total Level 1 Level 2 Level 3 Cash and cash equivalents held for investment $ 202,345 $ 150,959 $ 51,386 $ Fixed income: U.S. government 839, ,254 19,523 Corporate 695, , ,783 Mortgage and asset backed 287, ,456 U.S. equities (a) 185, ,824 Non-U.S. equities (b) 228, ,967 Real assets 282, ,340 Mutual funds 754, ,207 Alternative investments investment held by captive insurance companies (c) 219, ,023 15,383 $ 3,695,345 $ 2,653,791 $ 1,026,171 $ 15,383 13

16 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) December 31, 2016 (Audited) Total Level 1 Level 2 Level 3 Cash and cash equivalents held for investment $ 556,917 $ 519,547 $ 37,370 $ Fixed income: U.S. government 769, ,936 16,864 Corporate 823, , ,879 Mortgage and asset backed 350, ,020 Other 14,118 14,118 Equities: U.S. equities (a) 260, ,971 Non-U.S. equities (b) 96,622 96,622 Real assets 86,990 86,990 Mutual funds 393, ,901 Alternative investments investments held by captive insurance companies (c) 207, ,043 14,771 $ 3,560,208 $ 2,487,143 $ 1,058,294 $ 14,771 14

17 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) The Hospital s alternative investments and common collective/commingled trusts and pooled investments held by a related organization are reported using the equity method of accounting and, therefore, are not included in the tables above (see Note 1). Financial instruments invested in the Hospital s pension plans at fair value are classified in the table below in one of the three categories described above as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 (Unaudited) Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 130,602 $ 130,602 $ $ Fixed income: U.S. government 201, ,831 Equities: U.S. equities (a) 177, ,198 Non-U.S. equities (b) 2,393 2,393 Real assets 45,674 45,674 Mutual funds 174, , ,370 $ 732,370 $ $ Asset measured at net asset value as a practical expedient: Common collective fixed income (d) 21,696 Common collective equity funds (e) 461,914 Hedge funds (f) 319,177 Private equity (g) 200,665 Private real assets (h) 149,813 $ 1,885,635 15

18 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) December 31, 2016 (Audited) Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 60,341 $ 60,341 $ $ Fixed income: U.S. government 143, ,452 Equities: U.S. equities (a) 104, ,343 Non-U.S. equities (b) 3,122 3,122 Real assets 48,447 48,447 Mutual funds 150, , ,228 $ 510,228 $ $ Asset measured at net asset value as a practical expedient: Common collective fixed income (d) 20,661 Common collective equity funds (e) 558,993 Hedge funds (f) 265,138 Private equity (g) 149,952 Private real assets (h) 119,039 $ 1,624,011 (a) Equity portfolios invested in common stock of corporations primarily domiciled in the United States. (b) Equity portfolios invested in common stock of corporations primarily domiciled outside the United States, including emerging market countries. (c) Investments held by captive insurance companies consist of assets which are pooled with other assets that include marketable securities and alternative investments. The investments are managed by CCC Investment Trust and are independently audited. (d) Common collective/commingled trusts invested in corporate bonds and mortgage and asset backed securities. (e) Common collective/commingled trusts invested in common stock of corporations domiciled in the United States and outside the United States, including emerging market countries. (f) Hedge funds include long and short equity, multi-strategy, event driven and relative value funds invested with managers who invest with different strategies and typically employ some leverage. In long and short equity, fund managers create a portfolio of long positions in stocks expected to appreciate over time and short positions in stocks expected to depreciate. Event driven managers create a portfolio designed to profit from corporate events, such as mergers, spin-offs, defaults and bankruptcy. Relative value managers invest in long and short positions, but typically have a more neutral net market position than long and short. Multi-strategy is a fund employing a variety of hedge fund strategies. (g) Private equity investments include limited partnership investments in funds pursuing strategies in corporate buyouts, venture capital, growth equity, distressed and turnaround investments. 16

19 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) (h) Real estate and natural resources investments. The following is a description of the Hospital s valuation methodologies for assets measured at fair value. The fair value methodologies are not necessarily indicators of investment risk, but are descriptive of the measures used to arrive at fair value. Fair value for Level 1 is based upon quoted market prices. Investments classified as Level 2 are primarily valued using techniques that are consistent with the market approach. Valuations for Level 2 are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Inputs, which include broker/dealer quotes, reported/comparable trades, and benchmark yields are obtained from various sources including market participants, dealers and brokers. Common collective/commingled trusts and alternative investments are measured at net asset value. The valuation for alternative investments is described in Note 1. The methods described above may produce a fair value that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Hospital believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following is a summary of investments (by major class) that have restrictions on the Hospital s ability to redeem its investments at the measurement date, any unfunded capital commitments and the investments strategies of the investees as of September 30, 2017 (including investments accounted for using the equity method) (in thousands): Description of Investment Fair Value Unfunded Commitments Redemption Frequency (If Currently Eligible) Redemption Notice Period Common collective/ commingled trusts $ 830,420 $ Daily to quarterly 0 to 30 days Hedge funds 223,722 Monthly to tri-annually 45 to 180 days Private equity 200, ,707 * * Private real assets 134, ,521 * * $ 1,389,053 $ 347,228 * The Hospital s liquidity restrictions range from several months to ten years for certain private equity and real asset investments. Liquidity restrictions may apply to all or portions of a particular invested amount. 17

20 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 4. Fair Value Measurements (continued) The carrying values of cash and cash equivalents, receivables, accounts payable and accrued expenses, other current assets and liabilities are reasonable estimates of fair value due to the short-term nature of these financial instruments. Carrying value approximates fair value for other noncurrent financial instruments, excluding long-term debt obligations and financial instruments included in the fair value tables. At September 30, 2017 and December 31, 2016, the fair value of long-term debt obligations totaled approximately $2,943.4 million and $2,628.9 million, respectively, excluding capital leases and unamortized fair value adjustments. The fair value of long-term debt is classified as Level 2 in the fair value hierarchy, using techniques consistent with the market approach. Valuations for long-term debt are based on quoted market prices for related bonds. 5. Commitments and Contingencies Various investigations, lawsuits and claims arising in the normal course of operations are pending or on appeal against the Hospital. While the ultimate effect of such actions cannot be determined at this time, it is the opinion of management that the liabilities which may arise from such actions would not materially affect the consolidated financial position or results of operations of the Hospital. Refer to Note 12 of the Hospital s December 31, 2016 audited consolidated financial statements for its annual disclosure of other matters involving commitments and contingencies. 6. Long-Term Debt In June 2017, the Hospital entered into a transaction pursuant to which the Hospital purchased a 30-year leasehold condominium interest (with an option to extend) in approximately 480,000 square feet of space located at 466 Lexington Avenue (the Leasehold Condominium ) to be used to consolidate corporate services of the Health Care System. The new space will replace existing leased and owned office space. To finance the acquisition of the Leasehold Condominium, the Hospital issued to the seller a promissory note in the principal amount of $249.9 million (the Promissory Note ) which bears interest at a rate of 7% per annum. As of September 30, 2017, the note payable includes the principal amount of the Promissory Note and accrued interest of $4.4 million, totaling $254.3 million. Payments on the Promissory Note begin in January 2019 and continue through December Interest payments for the period from July 2017 through December 2018 are deferred. The Promissory Note is secured by a mortgage granted by the Hospital in its interest in the Leasehold Condominium. The Promissory Note is not an Obligation under the Master Trust Indenture. In connection with this transaction, the seller/landlord provided the Hospital with a leasehold improvement/tenant allowance of approximately $75.6 million, which was recorded in the Hospital s unaudited consolidated statements of financial position within other current assets and other noncurrent assets based on the timing of the receipts and other noncurrent liabilities in June

21 The New York and Presbyterian Hospital Notes to Unaudited Consolidated Financial Statements (continued) 7. Subsequent Events Subsequent events have been evaluated through November 28, 2017, which is the date the unaudited consolidated financial statements were issued. In October 2017, the Hospital and its affiliated medical schools entered into a software licensing and hosting contract with Epic Systems Corporation to create a single electronic health record (EHR) system across the three institutions. The new system is scheduled to be a multiyear installation with net incremental cost to the Hospital of approximately $476.7 million. This cost is expected to be funded with cash from operations of the Hospital. 19

22 The New York and Presbyterian Hospital Unaudited Consolidating Statement of Financial Position September 30, 2017 Consolidating Information The following table summarizes the unaudited consolidating statement of financial position at September 30, 2017 (in thousands): Obligated Group NYPH NYP/Lawrence Non-Obligated Group NYP Community Programs, Inc. NYP/Hudson Valley NYP/Queens Unaudited NYP/Brooklyn Methodist Eliminations / Reclasses Consolidated Assets Current assets: Cash, cash equivalents and short-term investments: Cash and cash equivalents $ 129,182 $ 25,728 $ 34,299 $ 19,231 $ 116,512 $ - $ 324,952 Short-term investments 1,439,791-38,844 52, ,097-1,999,141 Total cash, cash equivalents and short-term investments 1,568,973 25,728 73,143 71, ,609-2,324,093 Patient accounts receivable, less allowance for uncollectibles 648,806 38,670 27, ,707 72, ,289 Other current assets 197,739 5,848 7,632 16,762 32, ,073 Assets limited as to use current portion 32,698 2,488-22,334 22,557-80,077 Professional liabilities insurance recoveries receivable and related deposit current portion 68,681 4,972 2,049 7, ,740 Beneficial interest in net assets held by related organizations current portion 66, ,331 Loans receivable from Regional Hospitals - current portion 8, (8,279) - Due to related organizations - net 40,714 (38,727) (121) (3,782) (2,897) 4,813 - Total current assets 2,632,221 38, , , ,148 (3,466) 3,706,603 Assets limited as to use noncurrent 2,426,149 76,248 1,675 74, ,389-3,078,911 Property, buildings, and equipment net 3,402, , , , ,940-4,226,893 Other noncurrent assets net 37,630-2,211 13,257 4,426 (16,000) 41,524 Professional liabilities insurance recoveries receivable and related deposit noncurrent 178,741 19,046 7,072 35,247 12, ,645 Loans receivable from Regional Hospitals - noncurrent 499, (499,956) - Beneficial interest in net assets held by related organizations noncurrent 2,021, ,021,855 Total assets $ 11,198,712 $ 277,809 $ 262,722 $ 616,168 $ 1,492,442 $ (519,422) $ 13,328,431 20

23 The New York and Presbyterian Hospital Unaudited Consolidating Statement of Financial Position (continued) September 30, 2017 Consolidating Information (continued) Obligated Group NYPH NYP/Lawrence Non-Obligated Group NYP Community Programs, Inc. NYP/Hudson Valley NYP/Queens Unaudited NYP/Brooklyn Methodist Eliminations/ Reclasses Consolidated Liabilities and net assets Current liabilities: Long-term debt current portion $ 59,599 $ 3,160 $ (29) $ 4,118 $ 2,831 $ - $ 69,679 Loans payable to NYPH - current portion ,092 4,719 - (8,279) - Accounts payable and accrued expenses 481,568 25,564 19,200 55,442 77, ,279 Accrued salaries and related liabilities 266,522 14,080 12,439 21,795 60, ,751 Pension and postretirement benefit liabilities - current portion 21, ,842 Professional liabilities and other insurance liabilities - current portion 70,628 6,689 2,317 27,634 22, ,825 Other current liabilities 173,719 1,753 3,307 9,849 37, ,545 Due to related organizations - net ,813 4,813 Total current liabilities 1,073,281 52,020 40, , ,114 (3,466) 1,488,734 Long-term debt 2,690,764 21,342 (477) 27,714 26,175-2,765,518 Loans payable to NYPH - 5,460 51, , ,000 (515,956) - Professional liabilities and other insurance liabilities 309,775 33,661 11,166 89, , ,202 Pension liability 105,239 76,753-46,492 13, ,805 Postretirement benefit liability 22,278 2,491-27,330 5,217-57,316 Deferred revenue 1, ,128 Other noncurrent liabilities 355,962 15,414 7,929 84,107 97, ,771 Total liabilities 4,558, , , , ,306 (519,422) 5,749,474 Net assets: Unrestricted 4,552,099 53, ,118 72, ,118-5,431,800 Temporarily restricted 1,834,953 12,941 1,827 2,720 19,431-1,871,872 Permanently restricted 253,233 4,685 1,675 9,105 6, ,285 Total net assets 6,640,285 70, ,620 84, ,136-7,578,957 Total liabilities and net assets $ 11,198,712 $ 277,809 $ 262,722 $ 616,168 $ 1,492,442 $ (519,422) $ 13,328,431 21

24 The New York and Presbyterian Hospital Unaudited Consolidating Statement of Operations For the Nine Months Ended September 30, 2017 Consolidating Information (continued) The following table summarizes the unaudited consolidating statement of operations for the nine months ended September 30, 2017 (in thousands): Operating revenues Obligated Group NYPH Non-Obligated Group NYP Community Programs, Inc. NYP/Hudson NYP/Lawrence Valley NYP/Queens Unaudited NYP/Brooklyn Methodist Consolidated Net patient service revenue $ 4,035,278 $ 235,186 $ 185,287 $ 618,805 $ 744,728 $ 5,819,284 Provision for bad debts (49,504) (9,761) (3,589) (18,701) (25,446) (107,001) Net patient service revenue, less provision for bad debts 3,985, , , , ,282 5,712,283 Other revenue 216,675 3,497 3,179 24,670 37, ,644 Total operating revenues 4,202, , , , ,905 5,997,927 Operating expenses Salaries and wages 1,876, ,521 85, , ,510 2,712,190 Employee benefits 523,532 39,969 22,576 97,547 92, ,371 Supplies and other expenses 1,257,244 71,244 56, , ,370 1,845,687 Interest and amortization of deferred financing fees 57,438 1,019 1,980 5,083 7,859 73,379 Depreciation and amortization 212,338 9,676 7,819 20,715 17, ,091 Total operating expenses 3,927, , , , ,029 5,675,718 Operating income (loss) 275,430 (11,507) 10,533 11,877 35, ,209 Investment return 248,224 1, ,605 55, ,154 Excess (deficiency) of revenues over expenses 523,654 (10,226) 11,490 17,482 90, ,363 Other changes in unrestricted net assets: Net asset transfers (to) from related parties (11,505) 4,316-3,340 - (3,849) Net assets released from restrictions for the purchase of fixed assets ,025 1,025 Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 53, ,982 Change in pension and postretirement benefit liabilities to be recognized in future periods (15,490) - - (19,330) - (34,820) Change in unrestricted net assets $ 550,641 $ (5,910) $ 11,490 $ 1,492 $ 91,988 $ 649,701 22

25 DISCLOSURE REPORT DATED NOVEMBER 29, 2017 THE NEW YORK AND PRESBYTERIAN HOSPITAL FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2017 Table of Contents INTRODUCTION... 1 General... 1 Hospital Campuses... 2 Debt Structure... 3 FINANCIAL AND OPERATING INFORMATION... 6 Utilization... 6 Sources of Patient Service Revenue... 7 Summary Statements of Operations and Financial Position... 8 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 i-

26 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 6 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-