Dartmouth-Hitchcock Dartmouth-Hitchcock l Medical Center Drive Lebanon, NH 03756-0001 Phone (603) 650-5634 Fox [603) 650-7440 Dortmouth h i tchcock. org November 10 1 h, 2017 Re: Dartmouth-Hitchcock Obligated Group - Report for the Quarter Ended September 30, 2017 Dear Investor and/or Interested Party: In accordance with Section 5.11 of the various Loan Agreements and the various Continuing Disclosure Agreements relating to the members of the Dartmouth-Hitchcock Obligated Group: Dartmouth-Hitchcock Clinic, Mary Hitchcock Memorial Hospital, Cheshire Medical Center, New London Hospital and Mt. Ascutney Hospital and Health Center this is to advise the interim financial statements including utilization statistics and payor mix information for the quarter ended September 30, 2017, are now available to you through the DAC website. If you have any questions or would like further detail, please do not hesitate to call Tina Naimie (603-653-1155) or me (603-650-5634). Very truly yours, DaQ g~ Chief Financial Officer DPJ/ALO Enclosures cc: Tina E. Naimie
DARTMOUTH-HITCHCOCK OBLIGATED GROUP QUARTERLY REPORT For the Quarter Ended September 30, 2017
Quarterly Report September 30, 2017 Table of Contents Dartmouth-Hitchcock Obligated Group Financial Information and Utilization Statistics Page Consolidated Balance Sheets 1 Consolidated Statements of Operations and Changes in Unrestricted Net Assets 2 Consolidated Utilization Statistics 3 Consolidated Summary Statement of Unrestricted Liquidity 4 Consolidating Balance Sheets 5 Consolidating Statements of Operations and Changes in Unrestricted Net Assets For the Quarter Ended September 30, 2017 6 Consolidating Statements of Operations and Changes in Unrestricted Net Assets For the Three Months Ended September 30, 2017 (Year-to-Date) 7 Consolidating Utilization Statistics 8
Consolidated Balance Sheets September 30, 2017 June 30, 2017 Assets Current assets Cash and cash equivalents $ 40,281 $ 52,432 Patient accounts receivable, net 217,851 224,654 Prepaid expenses and other current assets 115,010 89,177 Total current assets 373,142 366,263 Assets limited as to use Internally designated by board 568,213 549,054 Held by captive insurance company 69,138 69,138 Under bond indenture agreement - held by trustee 2,441 2,008 Total assets limited as to use 639,792 620,200 Other investments for temporarily and permanently restricted activities 102,955 100,074 Property, plant and equipment, net 568,375 574,107 Other assets 91,764 90,733 Total assets $ 1,776,028 $ 1,751,377 Liabilities and Net Assets Current liabilities Current portion of long-term debt $ 18,288 $ 17,631 Current portion of liability for other postretirement plan benefits 3,220 3,220 Accounts payable and accrued expenses 87,165 83,702 Accrued compensation and related benefits 103,494 110,849 Estimated third-party settlements 26,016 20,502 Total current liabilities 238,183 235,904 Long-term debt, excluding current portion 591,097 597,693 Insurance deposits and related liabilities 50,960 50,960 Interest rate swaps 19,499 20,916 Liability for pension and other postretirement plan benefits, excluding current portion 276,232 282,971 Other liabilities 82,391 81,684 Total liabilities 1,258,362 1,270,128 Net assets Unrestricted 399,956 364,888 Temporarily restricted 75,967 75,083 Permanently restricted 41,743 41,278 Total net assets 517,666 481,249 Total liabilities and net assets $ 1,776,028 $ 1,751,377 Page 1
Consolidated Statements of Operations and Changes in Unrestricted Net Assets For the Period Ended September 30, 2017 Qtr-to-Date Year-to-Date Unrestricted revenue and other support Net patient service revenue $ 431,193 $ 431,193 Contracted revenue 10,425 10,425 Other operating revenue 31,962 31,962 Net assets released from restrictions 2,810 2,810 Total unrestricted revenue and other support 476,390 476,390 Operating expenses Salaries, contracted services and related employee benefits 281,935 281,935 Materials, supplies and other 137,008 137,008 Medicaid enhancement tax 16,474 16,474 Depreciation and amortization 20,702 20,702 Interest 4,582 4,582 Total operating expenses 460,701 460,701 Operating margin 15,689 15,689 Nonoperating gains 19,264 19,264 Excess of revenues over expenses 34,953 34,953 Net assets released from restrictions for capital acquisition 230 230 Net assets transferred from affiliate (1,020) (1,020) Net assets released due to lapse of restriction 51 51 Unrealized gain on interest rate swaps 854 854 Increase in unrestricted net assets $ 35,068 $ 35,068 Page 2
Consolidated Utilization Statistics For the Three Months Ended September 30, 2017 and the Fiscal Year Ended June 30, 2017 September 30, 2017 June 30, 2017 Licensed Beds, excluding all bassinets (as of this date) 625 625 Staffed Beds, including ICN bassinets (as of this date)* 566 566 Total Discharges - excludes newborn** 8,394 33,250 Total Patient Days - includes ICN** 40,264 159,483 Occupancy (as a percentage of staffed beds) 77.3% 77.2% Average Length of Stay (days) 4.8 4.8 Surgical Cases 7,354 30,142 Emergency Room Visits 17,255 66,189 Total Appointments 411,260 1,703,811 * Staffed beds includes ICN bassinets whereas licensed beds do not ** Includes Acute Care, Rehab, Swing, Sub-Acute and ICF Sources of Revenue: The following table categorizes payors into five groups and their respective percentages of gross patient service revenue. Payor Medicare 43% 43% Blue Cross 18% 19% Commercial Insurance 21% 21% Medicaid 13% 13% Other 5% 4% 100% 100% Page 3
Consolidated Summary Statement of Unrestricted Liquidity September 30, 2017 Annual Debt Service Coverage Ratio (Covenant >1.10x) Excess of revenues over expenses $ 34,953 Change in unrealized effectiveness on hedge (564) Less: net unrealized gains on investments (15,064) Excluded from expenses: Depreciation and amortization 20,815 Interest expense on long-term indebtedness - operating expense 4,582 Interest expense on long-term indebtedness - non-operating revenue 775 Aggregate Income Available for Debt Service $ 45,497 Annual Debt Service (one quarter) $ 8,456 Coverage of Annual Debt Service 5.38 Days Cash on Hand (Covenant > 75) Qtr - to - Date Year - to - Date Cash and cash equivalents per MTI $ 40,281 40,281 Less: restricted cash held in operating account (3,496) (3,496) Assets whose use is limited by Board Designation 568,213 568,213 Total Unrestricted Cash $ 604,998 604,998 Days Cash on Hand 126 126 Page 4
Consolidating Balance Sheets For the Period Ended September 30, 2017 D-H Cheshire NLH MAHHC ELIM D-HOG Assets Current assets Cash and cash equivalents $ 18,790 8,829 6,567 6,095-40,281 Patient accounts receivable, net 184,530 18,684 8,989 5,648-217,851 Prepaid expenses and other current assets 121,489 6,081 4,088 1,829 (18,477) 115,010 Total current assets 324,809 33,594 19,644 13,572 (18,477) 373,142 Assets limited as to use Internally designated by board 529,747 16,598 12,272 9,596-568,213 Held by captive insurance company 69,138 - - - - 69,138 Under bond indenture agreement - held by trustee 686 1,755 - - - 2,441 599,571 18,353 12,272 9,596-639,792 Other investments for temporarily and permanently restricted activities 86,436 7,601 2,863 6,055-102,955 Property, plant and equipment, net 444,602 63,671 42,987 17,115-568,375 Other assets 89,846 2,572 6,019 4,297 (10,970) 91,764 Total assets $ 1,545,264 125,791 83,785 50,635 (29,447) 1,776,028 Liabilities and Net Assets Current liabilities Current portion of long-term debt $ 16,622 780 703 183-18,288 Current portion of liability for other postretirement plan benefits 3,220 - - - - 3,220 Accounts payable and accrued expenses 76,206 21,114 5,268 3,054 (18,477) 87,165 Accrued compensation and related benefits 93,237 4,328 2,562 3,367-103,494 Estimated third-party settlements 17,251-7,302 1,463-26,016 Total current liabilities 206,536 26,222 15,835 8,067 (18,477) 238,183 Long-term debt, excluding current portion 537,832 26,447 26,248 11,540 (10,970) 591,097 Insurance deposits and related liabilities 50,960 - - - - 50,960 Interest rate swaps 16,250-3,249 - - 19,499 Liability for pension and other postretirement plan benefits, excluding current portion 261,071 8,334-6,827-276,232 Other liabilities 78,270 2,425 1,466 230-82,391 Total liabilities 1,150,919 63,428 46,798 26,664 (29,447) 1,258,362 Net assets Unrestricted 293,609 57,152 32,447 16,748-399,956 Temporarily restricted 69,037 5,211 374 1,345-75,967 Permanently restricted 31,699-4,166 5,878-41,743 Total net assets 394,345 62,363 36,987 23,971-517,666 Total liabilities and net assets $ 1,545,264 125,791 83,785 50,635 (29,447) 1,776,028 Page 5
Consolidating Statements of Operations and Changes in Unrestricted Net Assets For the Quarter Ended September 30, 2017 D-H Cheshire NLH MAHHC ELIM D-HOG Unrestricted revenue and other support Net patient service revenue $ 354,532 49,988 13,962 12,711-431,193 Contracted revenue 20,535 - - 502 (10,612) 10,425 Other operating revenue 29,998 924 978 374 (312) 31,962 Net assets released from restrictions 2,702 75 14 19-2,810 Total unrestricted revenue and other support 407,767 50,987 14,954 13,606 (10,924) 476,390 Operating expenses Salaries, contracted services and related employee benefits 238,858 32,829 9,095 7,847 (6,694) 281,935 Materials, supplies and other 116,952 15,943 4,510 4,199 (4,596) 137,008 Medicaid enhancement tax 13,377 1,949 738 410-16,474 Depreciation and amortization 16,395 2,671 1,117 519-20,702 Interest 4,060 274 243 54 (49) 4,582 Total operating expenses 389,642 53,666 15,703 13,029 (11,339) 460,701 Operating margin (loss) 18,125 (2,679) (749) 577 415 15,689 Nonoperating gains 17,448 1,282 584 365 (415) 19,264 Excess (deficiency) of revenue over expenses 35,573 (1,397) (165) 942-34,953 Unrestricted net assets Net assets released from restrictions for capital acquisition - - - 230-230 Net assets transferred (from) to affiliate (1,696) 300 48 328 - (1,020) Net assets released due to lapse of restriction 51 - - - - 51 Unrealized gain on interest rate swaps 794-60 - - 854 Increase (decrease) in unrestricted net assets $ 34,722 (1,097) (57) 1,500-35,068 Page 6
Consolidating Statements of Operations and Changes in Unrestricted Net Assets For the Three Months Ended September 30, 2017 D-H Cheshire NLH MAHHC ELIM D-HOG Unrestricted revenue and other support Net patient service revenue $ 354,532 49,988 13,962 12,711-431,193 Contracted revenue 20,535 - - 502 (10,612) 10,425 Other operating revenue 29,998 924 978 374 (312) 31,962 Net assets released from restrictions 2,702 75 14 19-2,810 Total unrestricted revenue and other support 407,767 50,987 14,954 13,606 (10,924) 476,390 Operating expenses Salaries, contracted services and related employee benefits 238,858 32,829 9,095 7,847 (6,694) 281,935 Materials, supplies and other 116,952 15,943 4,510 4,199 (4,596) 137,008 Medicaid enhancement tax 13,377 1,949 738 410-16,474 Depreciation and amortization 16,395 2,671 1,117 519-20,702 Interest 4,060 274 243 54 (49) 4,582 Total operating expenses 389,642 53,666 15,703 13,029 (11,339) 460,701 Operating margin (loss) 18,125 (2,679) (749) 577 415 15,689 Nonoperating gains 17,448 1,282 584 365 (415) 19,264 Excess (deficiency) of revenue over expenses 35,573 (1,397) (165) 942-34,953 Unrestricted net assets Net assets released from restrictions for capital acquisition - - - 230-230 Net assets transferred (from) to affiliate (1,696) 300 48 328 - (1,020) Net assets released due to lapse of restriction 51 - - - - 51 Unrealized gain on interest rate swaps 794-60 - - 854 Increase (decrease) in unrestricted net assets $ 34,722 (1,097) (57) 1,500-35,068 Page 7
Consolidating Utilization Statistics For the Three Months Ended September 30, 2017 D-H Cheshire NLH MAHHC D-HOG Licensed Beds, excluding all bassinets (as of this date) 396 169 25 35 625 Staffed Beds, including ICN bassinets (as of this date)* 422 90 19 35 566 Total Discharges - excludes newborn** 6,679 1,188 280 247 8,394 Total Patient Days - includes ICN** 31,404 5,121 1,304 2,435 40,264 Occupancy (as a percentage of staffed beds) 80.9% 61.8% 74.6% 75.6% 77.3% Average Length of Stay (days) 4.7 4.3 4.7 9.9 4.8 Surgical Cases 5,482 1,053 418 401 7,354 Emergency Room Visits 7,920 6,045 2,014 1,276 17,255 Total Appointments 273,174 108,493 17,268 12,325 411,260 * Staffed beds includes ICN bassinets whereas licensed beds do not ** Includes Acute Care, Rehab, Swing, Sub-Acute and ICF Sources of Revenue: The following table categorizes payors into five groups and their respective percentages of gross patient service revenue. Payor Medicare 42% 48% 54% 58% 43% Blue Cross 19% 14% 16% 15% 18% Commercial Insurance 20% 24% 20% 15% 21% Medicaid 14% 10% 5% 11% 13% Other 5% 4% 5% 1% 5% 100% 100% 100% 100% 100% Page 8