Tower Health Overview

For the Period Ended June 30, 2020 Unaudited Quarterly Disclosure

Tower Health (“Tower Health” or the “System”) is a Pennsylvania nonprofit corporation that serves as the parent organization of seven acute care hospitals, an inpatient behavioral health facility, and related facilities that have formed an integrated healthcare system located in the Counties of Berks, Chester and Montgomery, Pennsylvania and the City of Philadelphia, Pennsylvania.

 Brandywine Hospital in Coatesville (171 licensed beds);

 Chestnut Hill Hospital in Philadelphia (148 licensed beds);

 Jennersville Hospital in West Grove (63 licensed beds);

 Phoenixville Hospital in Phoenixville (137 licensed beds);

 Pottstown Hospital in Pottstown (232 licensed beds); and

 Reading Hospital in Reading (738 licensed beds, including 62 beds at Reading Rehabilitation Hospital at Wyomissing)

 St. Christopher’s Hospital for Children in Philadelphia (188 licensed beds) – as part of a 50/50 Joint Venture between Tower Health and Drexel University

 On July 14, 2020, Tower Behavioral Health, a 144-bed inpatient facility and ambulatory campus opened under a joint venture with Acadia Healthcare.

 Tower Health Medical Group - Network of more than 128 primary care and specialty care locations, that includes 890 physicians and 411 Advanced Practice Providers.

 Tower Health Partners - Clinically Integrated Network with more than 3,096 participating providers

 Tower Health UPMC Health Plan

 Tower Health Urgent Care - Tower Health acquired 19 urgent care locations from Premier Urgent Care on December 1, 2018. According to the Philadelphia Business Journal, the acquisition made Tower Health the largest operator of urgent care centers in the metropolitan Philadelphia area

 Tower Health at Home- Since July 1, 2019 home health services have grown 21% to a daily census of 386 patients and hospice services have grown 22% with an average daily census of 44 patients.

Tower Health at a Glance (excluding St. Christopher’s)

906,277 PSA Population(1) 12,162 Employees (10,362 FTEs)(4) $1.79 billion 44% Revenue(7) PSA Inpatient Market Share(2) 64,085 1,489 Total 28,612 (5) (9) Licensed Beds(3) Admissions Total Surgeries 328,618 122,219 Adjusted 1.76 million Patient Days(5) Admissions Physician Office Visits(8) 1,301 246,408 Emergency Room Visits 4,643 Employed Physicians and Babies Delivered Healthcare Providers(6)

(1) 2020 Environics Analytics Estimate based on Tower Health combined PSA (2) FY2019 market share based on Tower Health combined PSA (3) Excludes nursery beds; Includes 62 beds at Reading Hospital Rehabilitation at Wyomissing (4) Current as of June 30, 2020; includes THMG, THP, THUC, THAH, TowerDirect and all hospitals except St. Christopher’s (5) Excludes normal newborns (6) Includes residents; 890 physicians and 411 APPs; source THMG as of June 30, 2020 (incl. St. Chris) (7) Includes THMG, THP, THUC, THAH, Clinics, and all hospitals except St. Christopher’s (8) Actual THMG primary and specialty care visits (incl. St. Chris) (9) Includes 12,185 inpatient and 16,427 outpatient surgeries; Excludes endoscopies * All data is FY2020 unless otherwise noted

St. Christopher’s Hospital for Children At-A-Glance (Dec 2019 -June 2020)

2,722 240,245 Total Surgeries (5) PSA Pediatric Population(1) 188 30.2% Licensed Beds 2,434 PSA Pediatric Inpatient 2,034 Total Market Share (2) Employees Admissions (1,589 FTEs)(3) $176 M 5,309 Revenue (4) Adjusted 13,670 Admissions Patient Days 27,223 (1) 2020 Environics Analytics Estimate Emergency Room Visits (2) FY2019 PHC4 inpatient data; Patients age 0-17 (3) Current as of June 30, 2020 (4) Includes St. Christopher’s Hospital for Children only (5) Includes 1,235 inpatient and 1,533 outpatient surgeries; Excludes endoscopies * All data is Dec 15, 2019-June 30, 2020 unless otherwise noted

Awards

Reading Hospital

Reading Hospital received Healthgrades® America’s 100 Best Specialty Care: Stroke Care 100 Best Hospitals’ Award™ Recipient of Excellence Award™: Stroke Care, 4 Consecutive Years Neurosciences, Pulmonary Care, and Critical Care (2017-2020)

Emergency Department

Healthgrades US News & World Report • 100 Best Hospitals’ Award™ (2017-2019) • Best Regional Hospital in 6 Types of Care • America’s 250 Best Hospitals • Best National Hospital – Pulmonology Centers for Medicare & Medicaid Services: 5-Star Rating for Overall Hospital Quality

Awards (cont’d)

Brandywine Hospital, Chestnut Hill Hospital, Jennersville Hospital, Phoenixville Hospital, Pottstown Hospital

Phoenixville Phoenixville Chestnut Hill Brandywine Phoenixville Brandywine Brandywine Pottstown Pottstown Chestnut Hill Phoenixville Pottstown

Chestnut Hill

Brandywine Pottstown Chestnut Hill Phoenixville Brandywine Phoenixville Pottstown

Phoenixville Phoenixville Phoenixville Pottstown Pottstown Brandywine

Phoenixville Pottstown Brandywine Brandywine Brandywine Pottstown Pottstown Chestnut Hill Jennersville Jennersville Jennersville Phoenixville Phoenixville Phoenixville Pottstown Pottstown Pottstown

Brandywine Phoenixville • Joint Commission Gold Seal of Approval for: • Joint Commission Advanced Heart Failure Disease Specific Certification (2018) - Hip and Knee Replacement (2018) • Joint Commission Advanced Total Joint Replacement Disease Specific - Acute Myocardial Infarction (AMI) (2019) Certification (2018) - Wound Care (2019) • Joint Commission Accredited Primary Stroke Center (2019) - Advanced Certification in Stroke - Primary Stroke Center (2018) Pottstown - Laboratory (2019) • Joint Commission Gold Seal of Approval for: - Hip and Knee Replacement (2018) Chestnut Hill - Primary Stroke Center Designation (2018) • Joint Commission Certified Advanced Primary Stroke Center - Laboratory (2019) (2018-2020) • Joint Commission Disease Specific Care Certification for Wound Care (2018-2020) All Hospitals • Joint Commission Accredited - Laboratory (2019) • Joint Commission Hospital Accreditation Jennersville • Joint Commission Gold Seal of Approval – Laboratory (2018)

Awards (cont’d)

St. Christopher’s Hospital for Children

2019

45 St. Christopher’s Hospital for Children Physicians included in Top Docs 2019

Enitan Adegite, MD, Adolescent Medicine Nadja Peter, MD, Adolescent Medicine Karen Carvalho, MD, Child Neurology Verified Pediatric 2017-2019 Agustin Legido, MD, Child Neurology Burn Center ECMO Team at Joseph Melvin, DO, Child Neurology Maureen Fee, MD, Developmental-Behavioral Peds. St. Christopher’s Hospital for Children Endla Anday, MD, Neonatal-Perinatal Medicine RICHARD ROBINSON Alison Carey, MD, Neonatal-Perinatal Medicine Daniel Conway, MD, Immunology AWARD Jan Goplerud, MD, Neonatal-Perinatal Medicine St. Christopher’s Pediatric Folasade Kehinde, MD, Neonatal-Perinatal Medicine Level 1 Alan Zubrow, MD, Neonatal-Perinatal Medicine Associates Pediatric Nicole DeLarato, MD, Ophthalmology Center for the Robert Spector, MD, Ophthalmology Urban Child Trauma Center Martin Herman, MD, Orthopedic Surgery - Reach Out and Read - Shuping Ge, MD, Pediatric Cardiology Nandini Madan, MD, Pediatric Cardiology Igor Mesia, MD, Pediatric Cardiology Elizabeth Suarez, MD, Pediatric Endocrinology Harpreet Pall, MD, Pediatric Gastroenterology Gregory Halligan, MD, Pediatric Oncology Marta Rozans, MD, Pediatric Oncology David Zwillenberg, MD, Pediatric Otolaryngology Seth Zwillenberg, MD, Pediatric Otolaryngology Janet Chen, MD, Pediatric Infectious Disease Laurie Varlotta, MD, Pediatric Pulmonology Donald Goldsmith, MD, Pediatric Rheumatology Svetlana Lvovich, DO, Pediatric Rheumatology Grier Arthur III, MD, Pediatric Surgery Harsh Grewal, MD, Pediatric Surgery Rajeev Prasad, MD, Pediatric Surgery Keith Herzog, MD, Pediatrics Shareen Kelly, MD, Pediatrics Hans Kersten, MD, Pediatrics Francis McNesby, MD, Pediatrics Jeremiah Goldstein, MD, Pediatrics Roberta Laguerre-Frederique, MD, Pediatrics Deborah Sandrock, MD, Pediatrics Daniel Taylor, DO, Pediatrics Renee Turchi, MD, Pediatrics Paul Glat, MD, Plastic Surgery 2019 PCMH 2019 PCMH Brooke Burkey, MD, Plastic Surgery Wellington Davis, III, MD, Plastic Surgery Award of Distinction Outstanding Award Kiersten Arthur, MD, Sports Medicine Kathleen O'Brien, MD, Sports Medicine St. Christopher’s Hospital for St. Christopher’s Children – Special Needs Hospital for Children Center for Child with Special Healthcare Needs – Intense Care

Service Area – Primary Service Area and Secondary Service Area

The Tower Health Primary Service Area (PSA) accounts for 75% of Tower’s general acute care hospitals’ combined inpatient discharges using the top-volume zip codes and adjusting for contiguous zip codes.

The Tower Health Secondary Service Area (SSA) accounts for an additional 15% of combined inpatient discharges from Tower’s general acute care hospitals.

Displays Tower Health Hospitals and its top 10 competitors in terms of total discharges.

Recent Events

COVID-19 Crisis Update

In January 2020, Tower Health Infection Prevention teams began monitoring the outbreak of a novel coronavirus in Wuhan City, China. With the virus spreading overseas, Tower Health began preparing for its eventual appearance in the United States. By March, the virus had arrived in the U.S. and was soon declared a nationwide pandemic with an official name, COVID-19, designated by the World Health Organization (WHO).

As reported cases started to appear within our communities, Tower Health reacted quickly by establishing a systemwide Incident Command Center, as well as local Incident Command Centers within each of its operating entities. Together, these command centers collaborated, in coordination with the Pennsylvania Department of Health (PA DOH) and following the guidance of the Centers for Disease Control and Prevention (CDC), to complete the appropriate screening and protection of patients, employees, and visitors; testing of suspected COVID-19 patients; and care and treatment of patients with confirmed cases.

Like all health systems in the region and across the country, operations at Tower Health hospitals and care facilities have been significantly disrupted as we directed our efforts to effectively respond to the virus and the care needed for the people in our communities. Tower postponed elective surgical procedures and non-urgent and routine medical appointments and closed all outpatient and ambulatory facilities.

In addition, Tower has implemented the following critical actions in its response to COVID-19, including:

• Establishing Incident Command Centers for coordination of communications, supply acquisition, clinical practices and guidance, case reporting and resource availability, and crisis management

• Daily Huddles at both the system and local level to address concerns or urgent issues

• Creation of a daily dashboard with details regarding cases, testing and results, resources, staff availability and doubling rates among other key daily metrics

• Implementation of enhanced personal protective equipment (PPE) use and sterilization processes.

• Careful monitoring and management of PPE supply, specifically masks, gowns, eye protection, and sanitary wipes, and implementation of innovative methods to maximize existing supply channels while also utilizing alternative vendors to secure and maintain PPE inventories.

• Coordination of donation centers at all seven Tower Health hospitals to accept donations of PPE and other supplies at each hospital, following every lead to ensure PPE procurement.

• Rapid development and deployment of telemedicine capabilities, offering physician visits and virtual ICU capabilities by video – COVID-19 related or otherwise – through the use of multiple technologies, including Epic, Virtual Care by Teladoc, and Doxy.me

• Implementation of heightened visitation restrictions and policies at all care sites either limiting or eliminating altogether the number of visitors allowed in care settings.

Recent Events (cont’d)

• Establishment of six COVID-19 assessment sites throughout the Tower Health service area utilizing five existing Tower Health Urgent Care locations and creating one site in a recently closed physician practice building to keep possible COVID-19 infections out of the hospitals and physician practices as much as possible.

• Rapid implementation of work from home capabilities for an unprecedented number of employees across the system, including establishment of remote capabilities for call centers, expansion of network bandwidth and agile connectivity for continued team productivity

• Provision of local lodging accommodation to employees who chose not to go home to avoid possible exposure of family members to COVID-19.

• Implementation of furlough impacting more than 1,000 employees as a result of decreased patient volumes and revenues, but with continued support to those employees through access to their accrued time off, continued benefit coverage, addition to system labor pool, and support in completing the unemployment application process.

• Creation of Surge Capacity Forecasting tool to align timing and available resources at each hospital and facility to prepare well in advance for the anticipated impact of COVID-19 patient demand.

• Tower Health and Drexel University College of Medicine are among ten select health systems organizations participating in the IMMUNOPHENOTYPING ASSESSMENT IN A COVID-19 COHORT (IMPACC) clinical trial sponsored by the National Institute of Allergy and Infectious Diseases (NIAID). The goal of this study is to determine immunophenotypic and genomic features of COVID-19 in order to identify and prioritize the appropriate therapeutic interventions.

Recent Events (cont’d)

Combating COVID-19 Expanding Virtual Health and Telemedicine Options and Services In April, Tower Health added virtual care capabilities to help address its community's COVID-19 needs, as well as other healthcare conditions. Tower Health implemented the Teladoc Health virtual care platform to provide 24/7 on-demand care, enabling its employees, patients, and the broader community to seek quality, affordable care from the comfort of their home. Tower Health Medical Group also offers virtual visits through MyTowerHealth, an electronic patient portal, which allows patients to speak with a physician or APP by phone or video. At St. Christopher’s Hospital for Children, virtual visits with providers from St. Christopher’s Pediatric Associates are available through doxy.me, a safe, secure platform for non-life-threatening conditions and those that do not require in-person evaluations of a child’s symptoms. Patient response was very strong. From a baseline of 2,020 telephone visits in March, monthly volume April through June averaged over 19,000.

Educating the Community About COVID-19

Physicians and other experts from Tower Health were featured frequently in regional media stories, public service programming, and virtual community gatherings providing simple and fact-based information about disease prevention, symptoms, and treatments. This role in educating the community was especially important since some counties in the Tower Health service area do not have established public health departments providing such information to citizens. Tower Health also made COVID-19 data available to the public via the website. In addition, Tower Health established a call center as a single point of inquiry for community members seeking information on COVID-19, symptoms, testing, and referral to Tower Health providers.

Tower Health Urgent Care Centers Converted to COVID-19 Testing Sites Tower selected five of its Urgent Care Centers and converted them to dedicated COVID-19 testing facilities to improve public access to testing. Patients were able to come to the Centers from 9 a.m. to 9 p.m., seven days a week, either with a referral from their Primary Care Physician for testing or as walk-in appointments.

Tower Health Adds Disinfection Robots to Healthcare Team

During the week of June 3, 2020, Tower Health deployed UVC disinfection robots at each of its hospitals. The Finsen Technologies THOR UVC robot delivers a fast and effective germicidal dose of continuous wave UVC energy, killing germs and pathogens, including COVID-19, from floor to ceiling.

Tower Health Participates in Plasma Donation Study

Tower Health announced on April 22, 2020, that it is participating in important research involving the use of plasma from those who have recovered from COVID-19. The goal is to investigate the use of antibodies, presumed to be present in the plasma, as a treatment for those with the disease. This use of "convalescent plasma" is one of the major areas of research into COVID-19. Tower Health hospitals have registered to take part in this research under the Mayo Clinic Expanded Access Program.

Recent Events (cont’d)

Chestnut Hill Hospital Gets Backup from U.S. Army Reserves

Chestnut Hill Department of Defense members, including PAs, EMTs and RNs, came to Chestnut Hill Hospital to work along staff to provide clinical relief. They assisted staff with any challenges brought about by the increased stress of COVID-19 or other personal situations that may impact their job performance, health, mental, and emotional well-being. Tower Health Strategic Highlights Tower Health Transplant Institute Performs First Kidney Transplant at Reading Hospital Tower Health Transplant Institute (THTI) performed its first organ transplant at Reading Hospital on May 25, 2020. The kidney transplant surgery was performed by surgeons Gary Xiao, MD; Stephen Guy, MD; and David Reich, MD. Vanessa Smith, 63, of Pottstown, was the first THTI patient to receive a new organ. Tower Health and the transplant team established additional "COVID-safe" protocols above the hospital's standard procedures to protect patients and team members. The Tower Health Transplant Institute and Center for Liver Disease includes transplant and hepato-pancreato-biliary (HPB) surgery, hepatology, and transplant nephrology inpatient services at Reading Hospital, selected inpatient services at Chestnut Hill Hospital, and outpatient services at Reading Hospital and in Center City Philadelphia. The THTI team, formerly located at Hahnemann University Hospital, joined the Tower Health team in late 2019.

Tower Health and Drexel University Celebrate “Topping Off” at New Facility On May 18, 2020, Tower Health and Drexel University celebrated an official "Topping Off" ceremony for Drexel University College of Medicine at Tower Health, an additional site location of the medical school to be opened in Wyomissing, PA. Construction of the new facility is slated to be complete in time to welcome the first 40 students for the 2021-2022 academic year. The new facility will feature state-of-the-art technology, as well as traditional classrooms, learning communities, and lecture halls – all with a significant focus on wellness. It will include specially designed patient rooms, an anatomy laboratory, and simulation labs to help students advance their medical skills. The campus will have capacity to educate and train 200 medical students.

St. Christopher's Hospital for Children Opens New ICU Unit; Trauma and Critical Care Services Resume Effective March 17, 2020, St. Christopher's Hospital resumed Critical Care and Level 1 Trauma Services following the opening of an eight-bed pediatric intensive care unit called PICU East. The PICU East unit is in a separate section of the hospital and provides additional capacity for critically ill pediatric patients. Specially trained physicians, nurses, and other clinicians will staff the unit.

Tower Health Leadership/Physicians Taking the Lead

Tower Health Leadership Engaged in Industry-Wide COVID-19 Response Through the Hospital Association of Pennsylvania, as well as informal networks among the region’s health system leadership, Tower Health President and CEO Clint Matthews has been involved in the regional healthcare industry’s COVID-19 response, sharing best practices, and advocating for both state and federal support for hospitals. Mr. Matthews participated in exclusive conference calls with Pennsylvania Senator Pat Toomey, PA Congressional representatives, as well as senior officials with the Department of Health and Human Services, to advocate for support for children’s hospitals in the fight against COVID-19.

Recent Events (cont’d)

Reading Hospital Appoints Rosemary Wurster as Chief Nursing Officer

Effective June 7, 2020, Rosemary Wurster, DNP, MPH, RN, NEA-BC, CEN, was appointed Chief Nursing Officer (CNO) for Reading Hospital. Ms. Wurster will be responsible for the strategic, operational, and financial performance of nursing and patient care services. Ms. Wurster joined Tower Health in April 2019 as Vice President, Nursing Operations, Analytics and Finance and stepped in as interim CNO for Reading Hospital during the COVID-19 pandemic, serving on the Hospital's Incident Command team and providing outstanding leadership to nurses during this time of unprecedented challenge.

Jennersville Hospital Welcomes New Physicians to Gynecology and Cardiology Service Lines On June 1, 2020, Lesley Sweeney, MD, joined Gynecology - Tower Health Medical Group. Dr. Sweeney has over 20 years of specialized experience, including minimally invasive robotic gynecological surgery. Rasih Ener, MD, joined Cardiology - Tower Health Medical Group in April 2020. Additionally, Vadim Levin, MD, will begin seeing patients at the Jennersville Cardiology Group in July 2020.

Pottstown Hospital Welcomes Edward A. Chabalowski as Chief Financial Officer Pottstown Hospital announced the appointment of Edward A. Chabalowski, CPA, as Chief Financial Officer (CFO) effective June 16, 2020. Mr. Chabalowski continues as CFO of Phoenixville Hospital, a role he has held since May 2018. In his two years at Phoenixville Hospital, Mr. Chabalowski has teamed up with hospital executives and physicians to lead the hospital’s integration into Tower Health, strengthening Phoenixville Hospital through performance improvement initiatives, service line growth strategies, and balanced capital allocation. He has more than 35 years of experience in healthcare finance, operations, and strategy.

Phoenixville Hospital Appoints Robert McMurtrie, DO, as Chief Medical Officer

Phoenixville Hospital appointed Robert McMurtrie, DO, MBA, FAOCA, CPE, as Chief Medical Officer, on May 4, 2020. In this role, Dr. McMurtrie will provide leadership to foster and integrate medical services to meet the needs of the growing community. Dr. McMurtrie is board certified in Anesthesiology and Pain Management. Dr. McMurtrie holds a master's degree in Business Administration from the University of Scranton with specializations in both Operations Management and Healthcare Management. He is a member of American Association for Physician Leadership and American College of Healthcare Executives.

Advancing Health. Transforming Lives. In Our Communities

Tower Health Urgent Care Announces Opening of Three New Locations Tower Health announced the opening of three new Tower Health Urgent Care facilities throughout the summer. The new locations include: Tower Health Urgent Care North Coventry located at 44 Glocker Way in South Coventry Township, open as of Monday, July 6; Tower Health Urgent Care Sinking Spring located at 4870 Penn Avenue in South Heidelberg Township, open as of Monday, July 20; and Tower Health Urgent Care Thorndale located at 3477 Lincoln Highway in Caln Township, open as of Monday, August 3. All Tower Health Urgent Care facilities are open 365 days a year from 9 a.m. to 9 p.m. to provide walk-in care for a variety of conditions including: colds, flu, allergies, asthma, sore throat, sports injuries, minor lacerations, sprains, earaches, and preventative services such as physicals, vaccines, and occupational health.

Recent Events (cont’d)

Demonstrated Clinical Excellence

Reading Hospital Receives Healthgrades 2020 Patient Safety Excellence Award Reading Hospital announced on June 23, 2020, that it is a recipient of the Healthgrades 2020 Patient Safety Excellence Award™. This distinction places Reading Hospital among the top 5 percent of all acute care hospitals reporting patient safety data as evaluated by Healthgrades, the leading resource that connects consumers, physicians, and health systems.

Brandywine Hospital Earns Lung Cancer Screening Center Designation Brandywine Hospital has once again been designated a Lung Cancer Screening Center by the American College of Radiology (ACR) for both the Hospital site in Coatesville and the Hospital’s Imaging Center in Downingtown. The ACR Lung Cancer Screening Center designation recognizes facilities that have committed to practice safe, effective diagnostic care for individuals at the highest risk for lung cancer. Subsequent Events

Tower Health and Drexel University Announce New Chief Executive Officer for St. Christopher's Hospital for Children

Tower Health and Drexel University announced that Donald Mueller will become the new Chief Executive Officer (CEO) for St. Christopher's, effective July 27, 2020. Mr. Mueller joins St. Christopher's from his role as CEO of Children's Hospital at Erlanger in Chattanooga, Tennessee. In his five years with Children's Hospital at Erlanger, Mr. Mueller led one of four Comprehensive Regional Pediatric Centers in the state of Tennessee. Prior to Erlanger, Mr. Mueller served in multiple roles on the executive leadership team for Children's Healthcare of Atlanta - Emory University for 15 years. Among his responsibilities at Children's Healthcare of Atlanta, Mr. Mueller served as Executive Director of its Marcus Autism Center. He helped establish the Center, created its board of directors, recruited physicians and researchers, oversaw strategic and operational planning, built community and business partnerships, and generated philanthropic support. Mr. Mueller holds an undergraduate degree in Financial Management from The Catholic University of America and received his MBA in Healthcare Administration and Marketing from Loyola College.

Tower Health Announces Board of Directors Changes The Tower Health Board of Directors is composed of dedicated volunteers who provide community oversight to Tower Health as it fulfills its mission to provide high-quality, cost-effective healthcare for the communities it serves. Jim Boscov, retail business executive; Angel Helm, retired investment banking and finance executive; and William Thornton, Jr., Co-Chair of the Litigation Department at Stevens & Lee and an experienced securities and commercial litigator, have joined the Board effective July 1, 2020. In July of 2019, Tower Health welcomed to its Board John Fry, President of Drexel University; Sue Perrotty, retired executive; and Tod Auman, local business owner and former investment manager. Additional directors who continue their service to Tower Health include C. Thomas Work, Stevens & Lee; Meg Mueller, Fulton Financial Corporation; Brent Wagner, MD, Executive Director of the American Board of Radiology; Barbara Arner, a retired executive and restaurant owner; Chris Kraras, President and CEO, White Star Tours; and Karen Rightmire, Executive Director, Wyomissing Foundation. Clint Matthews also serves on the Board ex officio.

Management Discussion and Analysis

YTD Consolidated Statement of Operations for the 12-Months Ended June 30, 2020 and 2019

Note: $98 million of CARES Act funds are included in revenue in the table above.

Management Discussion and Analysis (cont’d)

Operational Performance 12 Months Ended June 30, 2020 vs June 30, 2019 As noted in our voluntary disclosure on April 7, 2020, the COVID-19 global pandemic that emerged around the world and in the United States prompted Pennsylvania Governor Thomas Wolf to issue lockdowns in order to slow the community spread of the virus. In addition, Governor Wolf issued mandates for hospitals in Pennsylvania to suspend all elective and non-emergency surgeries and admissions and to create capacity to treat patients with the COVID-19 virus. In addition, Tower Health closed five of its 20 urgent care centers and dedicated these facilities as COVID-19 testing facilities, in coordination with county and state departments of health. The results of the lockdown and mandates on the hospitals caused significant reductions in utilization and revenue. Expenses increased as management amassed the necessary supplies and retained required clinical professionals to meet the expected surge as indicated in several models provided to Tower by the Pennsylvania Department of Health. Tower Health (“Tower” or “System”) year-to-date operating performance through June 30, 2020 (FY 2020) reflects a decline, particularly with the five Chester/Montgomery/Philadelphia (“CMP”) hospitals. In FY 2020, although net revenue increased by 11.5% compared with the twelve-month period ending June 30, 2019 (Q4 FY 2019), the System generated a negative operating margin of 19.3% in FY 2020. FY 2020 performance includes $30.4 million of one-time, non-recurring expenses. Of the $30.4 million, $19.6 million was related to EPIC implementation costs at the newly acquired hospitals, including $2.3 million on the St. Christopher Hospital for Children project, with the remainder related to other one-time transaction costs. Excluding the $30.4 million in one-time, non- recurring expenses, the System’s operating income in FY 2020 was negative $378.2 million, resulting in an operating margin of negative 19.3%, compared with negative 9.0% in FY 2019. Excluding the $30.4 million in one-time, non-recurring expenses, the System’s operating cash flow margin (as defined on the prior page) was negative 10.1%, compared with negative 1.2% in FY 2019. Included in the June 30, 2020 results are additional one-time costs associated with the severance and unemployment costs of $18 million. These are not included in the non-recurring numbers stated above. Reading Hospital continued to generate operating income. Reading Hospital produced $76.6 million in operating income (7.4% operating margin) in FY 2020 compared with 12.3% in FY 2019. Reading Hospital’s operating cash flow margin* was 17.5%, compared with 21.8% in FY 2019. Total revenue for the CMP hospitals in FY 2020 decreased 1.5% as compared with the prior year period, while total expenses increased by 5.1%. The CMP hospitals’ results declined YTD in FY 2020 as compared to the prior year period, generating an operating income of negative $182.9 million, for an operating margin of negative 34.8%, compared with the twelve-month period ending June 30, 2019, which had an operating loss of $140.3 million and an operating margin of negative 26.3%. Excluding the $1.6 million of one-time transaction costs in FY 2020, the CMP hospitals generated operating cash flow income of negative $126.9 million and operating cash flow margin* of negative 24.2% in FY 2020 compared to negative $85.8 million and operating cash flow margin of negative 16.1% in FY 2019. The CMP hospitals’ net operating income decreased by 8.5% in FY 2020 as compared with the prior year period. *as defined on the prior page

Management Discussion and Analysis (cont’d)

Strategies aimed at increasing utilization at the CMP hospitals and were continuing to produce results until late March when the COVID-19 pandemic hit. Admissions in FY 2020 decreased by 1.6%, compared with FY 2019. Admissions at the CMP hospitals had previously shown an increasing trend over the previous eight quarters. The financial statements do not reflect the finalization of the asset monetization transaction (transaction expenses and offsetting liabilities are expected), and the finalized acquisition accounting for STC Healthcare Partners, LLC (owner of St. Christopher’s Hospital for Children), as the audit process is currently in process and adjustments to the opening balance sheet may be required in the audited financial statements.

Liquidity Total unrestricted cash and cash equivalents, short-term investments and board-designated funds for capital improvements were ~$900 million at June 30, 2020. This represents an increase of nearly $188 million from June 30, 2019. Total days cash on hand for the System was 147 at June 30, 2020, representing an increase of 7 days from June 30, 2019. The increase is primarily due to the asset monetization proceeds and offset by EPIC implementation costs and integration expenses. Net assets were $399 million at June 30, 2020. This represents a decrease of $395 million from June 30, 2019. In the past three months, Tower Health has added approximately $500 million of liquidity to its cash position. About $260 million of US Government stimulus funds have been received since April 2020 and $98 million have been received in grants, primarily from The Cares Act and $165 million of Advanced Medicare receipts were received in a one-time distribution in April 2020. The grants do not need to be repaid, but the Advanced Medicare funds will begin to be repaid in August 2020, unless Congress modifies the specifics of this program, which they are actively assessing. Approximately $200 million of liquidity came from a sale / leaseback of 23 buildings in a transaction closed in June 2020. This was done with buildings outside of the main Tower Health hospitals and converted fully owned, non-liquid assets into cash. These buildings are now under long term leases of between 15- 20 years. The book value of the buildings was ~$50 million and the gain on sale will be amortized over the life of the leases, in accordance with GAAP. This liquidity has supported Tower Health’s cash needs during the COVID-19 pandemic and more than $360 million of this liquidity remained as of fiscal 2020 year-end. Transformational Excellence Plan (TEP)

In the 3rd quarter of FY 2020 Tower Health launched Transformational Excellence, a system-wide continuing effort to improve financial performance. In response to expected impacts of the Covid-19 pandemic, the annual margin improvement target of the Transformational Excellence was expanded to $230M and work accelerated.

Management Discussion and Analysis (cont’d)

The scope includes adoption of a more centralized and streamlined model for Tower Health management that will support greater efficiency and faster decision-making. These actions and system-wide teams across all functions are enabling improvements in labor productivity, management structure, administrative services, patient care delivery, clinical cost management, supply chain and other areas. Transformational Excellence has realized early success, with $5.1M in realized savings in June against a $4M target for the month. As of the end of July, more than $130M in specific initiatives have been identified and launched towards the $230M goal.

Three critical examples of where Transformational Excellence initiatives have begun to realize margin improvement include the areas of workforce management, system-wide revenue cycle performance, and medical group operations. Workforce and labor management savings are directed by the system Chief Operating Officer. A reduction in force in mid-June eliminated 773 FTEs with annual savings of $76 million on a go forward basis; additional workforce management initiatives include realignment of labor productivity benchmarks, and elimination of certain premium pay practices. Revenue cycle improvements include a combination of operational expense savings and revenue yield opportunities designed to align system performance with leading practice; illustrative implemented initiatives include those addressing charge capture, denial management, and vendor management. Targeted initiatives within the medical group include consolidation of some practice locations to reduce fixed costs without sacrifice to patient access, which will be further enhanced through system-wide scheduling policies. Additionally, within the acute care setting, the medical group has implemented material reductions to locum tenens and other professional services expense. Revenue Cycle Tower Health’s solid Revenue Cycle operational foundation allowed the organization to meet the challenges presented during FY 2020. While continuing to stabilize the CMP markets after the August 2019 Epic implementation, managing a vendor partner change, and running down legacy accounts receivable, Tower Health also faced challenges associated with the COVID-19 pandemic. During the COVID-19 crisis, Revenue Cycle management has aggressively pursued advanced payments and outstanding claim resolution from their major commercial payors. Executive level discussions are held on a regular basis to expedite the payment of claims and ensure additional reimbursement options for services such as Telemedicine are received. These efforts resulted in cash collections of more than $20M in older outstanding claims and the generation of more than $2.5M in revenue from telemedicine visits during the last several months. In March of 2020 Epic was successfully implemented at all Urgent Care Centers allowing further consolidation and standardization of the Revenue Cycle. Additional efficiencies will be realized with the implementation to Epic at St Christopher’s Children’s Hospital targeted for February of 2021. The consolidation of systems and operations across Tower Health is allowing Revenue Cycle Operations to increase efficiencies and reduce costs as part of the Transformation Excellence program. Integration strategies implemented to increase revenues and reduce costs include denials management revenue recovery, account segmentation adjustments, integration of scheduling services, vendor partner utilization and rate adjustments. These initiatives are projected to increase revenues or reduce cost by more than $30M annually.

Management Discussion and Analysis (cont’d)

Academic Partnership with Drexel University College of Medicine On May 18, Tower Health and Drexel University celebrated an official "Topping Off" ceremony for Drexel University College of Medicine at Tower Health, an additional site location of the medical school to be opened in Wyomissing, PA. Construction of the new facility is slated to be complete in time to welcome the first 40 students for the 2021-2022 academic year. Tower Health President and CEO, Clint Matthews, and Drexel University President, John Fry, addressed the audience. Drexel University College of Medicine at Tower Health is one facet of a 20-year academic affiliation agreement between Tower Health and Drexel University. This innovative partnership will bring together rigorous medical education from Drexel and a clinically advanced training environment at Tower Health's flagship Reading Hospital to create a premier destination for physicians of the future. The new facility will feature state-of-the-art technology, as well as traditional classrooms, learning communities, and lecture halls, and a significant focus on wellness. It will include specially designed patient rooms, an anatomy laboratory, and simulation labs to help students advance their medical skills. When fully operational, the campus will have capacity to educate and train 200 medical students. Construction on the facility continued during the recent stay-at-home orders after receiving a waiver as an essential healthcare project.

Management’s Response to the COVID-19 Crisis Through June 30, 2020 and beyond, management continues to undertake significant actions to mitigate the negative impact of COVID-19.

Mitigation As a result of significant utilization and revenue decline, management furloughed approximately 1,000 FTEs in a range of support, technical, and administrative areas. Impacted employees will have access to accrued time off that they can use during this time and will maintain coverage under their benefits plan. As of June 16, 2020, Management instituted a Reduction in Force (RIF) that is projected to save $76 million during FY2021. In addition, management has suspended routine capital expenditures and is re-evaluating long-term capital expenditures.

Relief Funds Tower Health has received $136 million in grants from several phases of the CARES Act stimulus bill so far, with additional funding likely. Additionally, deferral of the FICA payroll tax provides $25 million in reduced cash payments. Tower anticipates that it will also benefit from the suspension of Medicare sequestration, the delay of Disproportionate Share Hospital payments reductions for hospitals and the 20% add-on to the DRG payment for inpatients with COVID-19.