Ochsner Health System Quarterly Financial Information Disclosure

For the Three Months Ended March 31, 2015 Forward Looking Information:

This Financial Information Disclosure contains disclosures, which contain “forward looking statements” within the meaning of the Federal securities laws. Forward looking statements include all statements that do not relate solely to historical or current fact and can be identified by the use of words “expect”, “anticipate”, “intend”, “project”, “likely”, “may”, “might”, “estimate”, “budget” and similar words or expressions. These forward looking statements are based on the current plans and expectations of Ochsner Health System (“OHS”) as of the date of this report and are subject to a number of known and unknown risks and uncertainties inherent in the operation of health care facilities, many of which are beyond OHS's control, that could significantly affect current plans and expectations and OHS's future financial position and results of operations.

Important factors that could cause results to differ materially from those expected by management include, but are not limited to, general, economic and business, competition from other healthcare facilities in the service areas, an unfavorable pricing environment, inability to achieve expected efficiencies in operations or effectively control health care costs, the efforts of insurers and others to contain health care costs, changes in Medicare or Medicaid reimbursement formulas, the risk that managed care provider arrangements will not be negotiated or renewed on acceptable terms, future divestitures or acquisitions which may have a financial impact, availability and terms of capital to fund future expansion and ongoing capital needs, new laws or regulations, the possible enactment of federal or state health care reform, fines or penalties related to regulatory matters, changes in accounting standards and practices, the outcome of pending and future litigation and government investigations, labor issues and the ability to attract and retain qualified management and other personnel, including physicians, nurses and medical support personnel.

Given these uncertainties, bondholders and prospective bondholders are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report. OHS disclaims any obligation, and makes no promise, to update any such factors or forward looking statements or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy of any forward looking statements, whether as a result of changes in underlying factors, to reflect new information, as a result of the occurrence of events or developments or otherwise.

2 MANAGEMENT’S DISCUSSION OF FINANCIAL RESULTS

INTRODUCTORY STATEMENT

System Overview: Ochsner Health System (“OHS” or the “System”) is a Louisiana nonprofit corporation exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”). OHS was formed in July 2006 and became the sole corporate member of Ochsner Clinic Foundation (“OCF”) in September 2006. OHS is also the sole corporate member of Ochsner Community Hospitals (“OCH”), a Louisiana nonprofit corporation, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Code.

OCF is a Louisiana nonprofit corporation, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Code. OCF, headquartered in New Orleans, Louisiana, either directly or through its fully owned affiliates, owns and operates a 565 bed acute care hospital known as Ochsner Medical Center (“OMC”), an 11-story clinic building, a 143-room hotel and related medical facilities located on a main campus in Jefferson Parish at the western end of New Orleans (the “Main Campus”). It operates Ochsner Medical Center Westbank, a 165 bed acute care hospital, and Ochsner Baptist, a 102 bed acute care hospital, as remote campuses of Ochsner Medical Center. It also owns and operates a 150 bed acute care hospital in Baton Rouge that operates as Ochsner Medical Center Baton Rouge, a 157 bed acute care hospital in Slidell, Louisiana that operates as Ochsner Medical Center – Northshore, 58 health centers throughout southeast Louisiana and several fitness centers that operate as Elmwood Fitness Center. It also operates a 35 bed acute care hospital in Raceland, Louisiana known as Ochsner St. Anne General Hospital, provides management assistance and support for a hospital in Houma, Louisiana known as Leonard J. Chabert Medical Center, and provides management assistance and support for a hospital in Luling, Louisiana known as St. Charles Parish Hospital.

OCH was formed on July 17, 2006 and owns and operates Ochsner Medical Center Kenner, a 110 bed acute care hospital. It also owns Ochsner Medical Center Westbank and Ochsner Baptist Medical Center which are leased to Ochsner Clinic Foundation and operate as remote campuses of Ochsner Medical Center.

On September 1, 2014 OHS entered into a management agreement with Hospital Service District No. 1 of St. Charles Parish to provide management assistance and support to St. Charles Parish Hospital (“SCPH”) which operates as a public, safety net hospital for the residents of St. Charles Parish. OHS, as manager of the facility, does not report utilization statistics related to SCPH. SCPH remains a public hospital owned by St. Charles Parish and governed by the St. Charles Hospital Service District No 1 board.

On September 30, 2014 OHS entered into a Joint Operating Agreement with St. Tammany Parish Hospital Service District No. 1 (“STPH”) to coordinate resources to lower costs, improve quality and create a seamless clinical environment for patients in western St Tammany Parish. STPH will remain a parish hospital under local control, STPH employees will remain employed by STPH, and STPH will maintain an open medical staff. Decisions related to the Joint Operating Agreement will be coordinated by a Joint Board Oversight Committee.

Obligated Group: OCF is the only Obligated Group Member under the Master Indenture. Certain affiliates of OCF have been designated as Designated Affiliates and Credit Group Members under the Master Indenture. Under the Master Indenture, Obligated Group Members are jointly and severally liable to make payments with respect to Obligations issued under the Master Indenture. Obligated Group Members may designate entities as Designated Affiliates under the Master Indenture, and may rescind such designation at any time. Designated Affiliates include Brent House Corporation, Ochsner Clinic L.L.C., Ochsner Bayou, L.L.C., East Baton Rouge Medical Center, LLC DBA Ochsner Medical Center Baton Rouge, Ochsner Medical Center Northshore, LLC, Ochsner Home Medical Equipment, LLC, Ochsner Community Hospitals, Ochsner Baptist Medical Center, LLC, Ochsner Medical Center Westbank, LLC and Ochsner Medical Center Kenner, LLC. OCF and the other Credit Group Members constituted 93.3% of the consolidated total assets of OHS as of March 31, 2015 and 98.57% of the consolidated total revenue of OHS for the three months ended March 31, 2015.

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FINANCIAL RESULTS

OHS had Income from Operations of $14.8 million for the first three months of 2015 compared to a Loss from Operations of <$10.2> million for the first three months of 2014 and Excess of Revenues over Expenses of $20.3 million for the first three months of 2015 compared to a Deficiency of Revenue over Expenses of <$8.8> million for the first three months of 2014. 2014 includes the negative financial effects of an ice storm that impacted hospital outpatient services and closed clinics for two days in January.

The System achieved total operating revenue of $615.8 million in the first three months of 2015, an increase of $100.7 million or 19.6% over the same period in 2014 primarily due to an increase in patient volume. Net patient service revenue less provision for bad debts increased $87.5 million or 21.5%. When comparing the first three months of 2015 to the first three months of 2014 discharges increased 9.9%, patient days increased 4.5%, inpatient surgical procedures increased 12.4%, outpatient surgical procedures increased by 8.7%, emergency room visits increased 14.3%, clinic relative value units increased 13.5%, outpatient visits decreased 9.2% and clinic visits increased 15.5%. OHS continues to see an increase in patients referred from affiliates and outlying facilities through its regional referral center. Inpatient transfers to Ochsner Medical Center in the first quarter of 2015 increased 61% over the first quarter of 2014.

Other Operating Revenue for the first three months of 2015 was $49.4 million, a $10.1 million increase over the same period in 2014. $1.3 million of the increase is related to the September 1, 2014 agreement with Hospital Service District No. 1 of St. Charles Parish to provide management services to SCPH. Other Operating Revenue for the first three months of 2015 also includes a $10.9 million increase related to the inpatient pharmacy.

The provision for bad debt for Ochsner Health System, as a percentage of Net Patient Service Revenue and Net Premium Revenue, was 3.1% for the first three months of 2015 compared to 4.8% for the first three months of 2014. Bad debt and charity care combined accounted for 6.6% of Net Patient Service Revenue and Net Premium Revenue for the first three months of 2015 compared to 8.2% for the same period in 2014. OHS has implemented procedures across the System to improve the collection process at the time of service.

Salaries and wages for the first three months of 2015 were $271.2 million, a $27.9 million increase over the same period in 2014. After adjusting for SCPH, the year over year increase is $26.0 million or 10.7%. The majority of the increase is related to additional staffing and additional providers needed to meet increased patient demand. Total providers increased by 4.2% or 47 FTEs. That includes an 8.0% increase in physicians, or 63 FTEs, and an 18.3% increase in the number of other providers, or 57 FTEs.

Medical services to outside providers expense for the first three months of 2015 increased by $3.1 million over the first three months of 2014 primarily due to an increase in covered lives and an increase in pharmacy costs related to those members. The System currently manages over 34,000 Medicare Advantage members under a capitated arrangement.

Medical Supplies and Services increased by $23.9 million when comparing the first three months of 2015 to the first three months of 2014. Medical Supplies and Services as a percentage of Net Patient Service Revenue, Net Premium Revenue and Other Operating Revenue was 16.4% for the first three months of 2015 and 14.9% for the same period in 2014. The increase is due to pharmacy costs associated with the inpatient pharmacy and a continuing shift toward higher acuity procedures, including a 69.1% increase in transplants and a 12.4% increase in inpatient surgical procedures. Supply chain initiatives targeting waste prevention and cost reduction such as physician preference item pricing, product standardization and utilization continue to offset inflation and reduce medical supply costs after adjusting for the higher acuity procedures.

4 Other operating expenses which includes building and equipment, insurance, professional services and general and administrative expenses for the first three months of 2015 increased by $15.2 million over the first three months of 2014. After adjusting for SCPH, the year over year increase is $14.4 million.

Non Operating gains due to market appreciation of the pooled investment portfolio for the first three months of 2015 were $5.4 million compared to $1.3 million for the first three months of 2014.

LIQUIDITY AND CASH POSITION

At March 31, 2015, Ochsner Health System had unrestricted cash and investments of $597.8 million which equates to 95 days cash on hand. The $6.6 million decrease from December 2014 includes seasonal timing differences including a $27.3 million increase in patient accounts receivable and a $12.1 million decrease in accounts payable. This was partially offset by a $9.1 million increase in unrestricted investments due to an increase in market valuations.

As of March 31, 2015 OHS has $62.4 million of donor restricted investments.

5 OCHSNER HEALTH SYSTEM EXCESS OF (DEFICIENCY IN) REVENUES OVER EXPENSES For the Three Months Ended March 31, 2015 and March 31, 2014 ($Thousands)

Mar 2015 Mar 2014 DIFF

NET PATIENT REVENUE 510,566 428,553 82,013 PROVISIONS FOR BAD DEBTS (16,673) (22,163) 5,490 NET PATIENT SERVICE REVENUE LESS PROVISIONS FOR BAD DEBTS 493,893 406,390 87,503 PREMIUM REVENUE 71,709 68,879 2,830 RESTRICTED FUNDS TRANSFER 807 560 247 OTHER OPERATING REVENUE 49,370 39,246 10,124 TOTAL OPERATING REVENUE 615,779 515,075 100,704

SALARIES AND WAGES 271,216 243,327 (27,889) BENEFITS 40,965 38,182 (2,783) MEDICAL SERVICES TO OUTSIDE PROVIDERS 38,177 35,112 (3,065) MEDICAL SUPPLIES AND SERVICES 100,684 76,834 (23,850) OTHER OPERATING EXPENSES 113,613 98,401 (15,212) DEPRECIATION AND AMORTIZATION 25,506 24,278 (1,228) INTEREST 10,778 9,104 (1,674) TOTAL OPERATING EXPENSES 600,939 525,238 (75,700)

INCOME FROM OPERATIONS 14,841 (10,163) 25,004

REALIZED GAINS AND LOSSES 1,533 909 624 UNREALIZED GAINS ON ALTERNATIVE INVESTMENTS 3,889 405 3,484 NON-OPERATING GAINS AND LOSSES 5,422 1,314 4,108

EXCESS OF REVENUE OVER EXPENSES 20,263 (8,849) 29,112

6 OCHSNER HEALTH SYSTEM CONSOLIDATED BALANCE SHEET As of March 31, 2015 and December 31, 2014 ($Thousands)

Mar 31, 2015 Dec 31, 2014 ASSETS

CASH AND CASH EQUIVALENTS 139,568 158,658 ASSETS LIMITED AS TO USE REQUIRED FOR CURRENT LIABILITIES 775 2,687 PATIENT ACCOUNTS RECEIVABLE - NET 241,133 213,827 ACCOUNTS RECEIVABLE - OTHER 76,367 71,690 INVENTORY 43,692 42,384 PREPAID EXPENSES AND OTHER CURRENT ASSETS 26,127 26,205 ESTIMATED THIRD PARTY PAYER SETTLEMENTS - NET 18,396 25,164 TOTAL CURRENT ASSETS 546,058 540,616

ASSETS LIMITED AS TO USE BY BOARD FOR CAPITAL IMPROVEMENTS, CHARITY, AND RESEARCH 458,223 445,703 UNDER BOND INDENTURE AGREEMENTS 44,009 44,009 UNDER SELF INSURANCE TRUST FUND 12,306 9,740 DONOR RESTRICTED LONG TERM INVESTMENTS 62,380 63,163 TOTAL ASSETS LIMITED AS TO USE 576,918 562,615

LESS ASSETS LIMITED FOR CURRENT LIABILITY (775) (2,687) TOTAL NON-CURRENT ASSETS LIMITED AS TO USE 576,144 559,928

INVESTMENTS IN UNCONSOLIDATED AFFILIATES, REAL ESTATE AND OTHER 6,358 6,301 PROPERTY NET OF ACCUM DEP 724,177 734,874 GOODWILL - NET 43,077 43,077 OTHER INTANGIBLE ASSETS - NET 11,480 11,482 OTHER ASSETS 17,994 18,006 TOTAL ASSETS 1,925,287 1,914,283

7 OCHSNER HEALTH SYSTEM CONSOLIDATED BALANCE SHEET As of March 31, 2015 and December 31, 2014

($Thousands)

LIABILITIES AND NET ASSETS MAR 31, 2015 DEC 31, 2014

ACCOUNTS PAYABLE 105,744 117,814 ACCRUED SALARY AND WAGES 139,157 136,296 DEFERRED REVENUE 8,743 15,520 ESTIMATED THIRD PARTY PAYER SETTLEMENTS - NET 5,481 5,331 BOND PAYABLE - CURRENT 6,230 6,230 NOTE PAYABLE 52,430 52,985 LONG TERM DEBT - CURRENT PORTION 16,180 15,364 OTHER 34,118 28,249 TOTAL CURRENT LIABILITIES 368,083 377,789

PENSION AND POST RETIREMENT OBLIGATIONS 155,281 156,907 BONDS PAYABLE - NON CURRENT 566,321 566,242 LONG TERM DEBT 189,104 193,182 OTHER LONG TERM LIABILITIES 27,947 28,453 TOTAL LIABILITIES 1,306,736 1,322,573

UNRESTRICTED FUND BALANCE 549,402 523,310 TEMPORARILY RESTRICTED FUND BALANCE 45,722 45,003 PERMANENTLY RESTRICTED FUND BALANCE 23,428 23,397 TOTAL NET ASSETS 618,552 591,710

TOTAL LIABILITIES AND NET ASSETS 1,925,287 1,914,283

8 OCHSNER HEALTH SYSTEM UTILIZATION STATISTICS

March 2015 2008 2009 2010 2011 2012 2013 2014 YTD Average Licensed Beds (1) 91 1,079 1,235 1,246 1,252 1,235 1,267 1,284 Average Number of Beds in Use (2) 4 1,111 1,278 1,293 1,308 1,293 1,346 1,372 Discharges Including Newborn 50,090 52,995 58,943 62,463 61,706 60,306 62,517 16,401 Discharges Excluding Newborn 242,139 48,837 53,370 56,377 55,674 54,731 56,771 15,002 Patient Days Including Newborn 242,139 250,362 271,734 282,160 288,705 279,494 301,055 78,512 Patient Days Excluding Newborn (3) 232,561 240,649 258,803 268,437 275,017 268,985 287,706 75,407 Average Daily Census (3) 659 722 735 751 737 788 838 Percent Occupancy (3) 58.78% 59.34% 56.49% 56.89% 57.44% 57.01% 58.54% 61.07% Average Length of Stay 4.8 4.7 4.6 4.5 4.7 4.6 4.8 4.8 Adjusted Patient Days (3) 403,675 440,485 468,384 494,533 527,382 539,591 576,981 149,662

Ochsner OMC OMC Ochsner Medical OMC Ochsner Baton North OMC Baptist Center WestBank St Anne Rouge Shore Kenner Med Ctr TOTAL Average Licensed Beds (1) 565 165 35 150 157 110 102 1,284 Average Number of Beds in Use (2) 561 181 35 159 165 115 156 1,372 Discharges Including Newborn 6,622 1,965 538 2,116 1,204 1,743 2,213 16,401 Discharges Excluding Newborn 6,622 1,723 469 1,819 1,188 1,526 1,655 15,002 Patient Days Including Newborn 39,414 8,731 1,885 7,107 5,772 6,631 8,972 78,512 Patient Days Excluding Newborn (3) 39,414 8,127 1,742 6,501 5,719 6,129 7,775 75,407 Average Daily Census (3) 438 90 19 72 64 68 86 838 Percent Occupancy (3) 78.06% 49.89% 55.30% 45.43% 38.51% 59.22% 55.38% 61.07% Average Length of Stay 6.0 4.4 3.5 3.4 4.8 3.8 4.1 4.8 Adjusted Patient Days (3) 68,471 15,019 6,707 18,716 11,888 13,112 15,749 149,662

(1) Data excludes NICU and Nursery Beds. (2) Data excludes Nursery beds, but includes NICU beds. (3) Data excludes Normal Newborn Days.

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