Unaudited Financial Statements

U N A U D I T E D I N T E R I M C ONSOLIDATED F I N A N C I A L S TATEMENTS AND S UPPLEMENTARY INFORMATION

The New York and Presbyterian Hospital As of and For the Six Months Ended June 30, 2016

DISCLOSURE REPORT DATED AUGUST 29, 2016 THE NEW YORK AND PRESBYTERIAN HOSPITAL FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2016

Table of Contents

INTRODUCTION ...... 1 General ...... 1 Hospital Campuses ...... 2 Debt Structure ...... 3 FINANCIAL AND OPERATING INFORMATION ...... 5 Utilization ...... 5 Sources of Patient Service Revenue ...... 6 Summary Statements of Operations and Financial Position ...... 7 Liquidity ...... 11 Long-Term Debt Service Coverage ...... 13 Capitalization ...... 14 Management’s Discussion and Analysis of Utilization ...... 15 Management’s Discussion and Analysis of Recent Financial Performance ...... 16 Outstanding Long-Term Indebtedness ...... 17 Investments ...... 18 Philanthropy ...... 19 Fund, Inc...... 19 Capital Expenditures ...... 19 Royal Charter Properties ...... 20

-i-

New York-Presbyterian Organizational Structure

New York-Presbyterian Foundation, Inc.

The New York New York- Royal Charter Royal Charter Royal Charter New York-Presbyterian and Presbyterian Presbyterian Properties-East, Properties- Properties, Inc. Healthcare System, Inc. Hospital Fund, Inc. Inc. Westchester, Inc.

NYP NYP The Rogosin Institute Community Community Services, Inc. Programs, Inc.

The New York Gracie Square Hospital New York- New York- The Hospital for New York- Presbyterian / Presbyterian / Special Surgery Presbyterian / Lawrence Hudson Valley Queens Hospital6 Hospital The Silvercrest Center for Nursing and

Rehabilitation 1 Obligated Group

Supporting Corporations, NYHB, Inc. 2 Non -Obligated Group

Hospital Subsidiary, 3 The New York Non -Obligated Group The New York Community Methodist Hospital of Hospital7 Other Related Corporations, Brooklyn 4 Non-Obligated Group

Corporate Members, 5 Non-Obligated Group Footnotes on next page

-ii-

1. In connection with the issuance by The New York and Presbyterian Hospital of its Series 2015 Bonds in February 2015, the Hospital formed an Obligated Group under and as defined in its Master Trust Indenture. Currently, the Hospital is the sole member of the Obligated Group. For a discussion of the Master Trust Indenture, the Obligated Group and the debt covered thereby, see “Introduction – Debt Structure – The MTI Indebtedness” on page 4 of this Disclosure Report. 2. For a discussion of the Supporting Corporations, see the third paragraph under the heading “Introduction – General” on page 2 of this Disclosure Report. 3. The Hospital subsidiaries are those entities under the control of the Hospital or one of its direct subsidiaries. These entities are part of the Hospital’s consolidated group that is reported in the consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles. Entities included in the Hospital’s consolidated financial statements, other than the Hospital and any subsidiaries of the Hospital that may in the future join the Obligated Group, are not legally obligated on the Hospital’s indebtedness. 4. These corporations coordinate membership in the Health Care System (as hereinafter defined). For additional details, see the third paragraph under the heading “General” on page 2 of this Disclosure Report. 5. For a discussion of the Corporate Members, see the third paragraph under the heading “Introduction – General” on page 2 of this Disclosure Report. 6. In July 2016 NYP Community Programs, Inc. filed a certificate of need application to the New York State Department of Health seeking approval to transfer NYP/Lawrence Hospital from NYP Community Services, Inc. to NYP Community Programs, Inc. 7. In July 2016, NYP Community Programs, Inc. filed a certificate of need application to the New York State Department of Health seeking approval to be an “active parent” of The New York Methodist Hospital and will seek implementation of “active parent” status by the end of 2016. In addition, New York Community Hospital of Brooklyn, Inc. filed a certificate of need application to the New York State Department of Health requesting approval of the disestablishment of NYHB, Inc. as its active parent.

Note: The Hospital is the only entity that is obligated with respect to repayment of its indebtedness, including its Series 2015 Bonds and its Series 2016 Bonds. None of the assets or revenue of any of the other entities described above is committed to the repayment of the Hospital’s indebtedness.

-iii-

FORWARD-LOOKING STATEMENTS

Certain statements in this disclosure report that relate to the Hospital are forward-looking statements that are based on the beliefs of, and assumptions made by, the management of the Hospital. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Hospital to be materially different from any expected future results or performance. * * * * *

PREVIOUSLY REPORTED INFORMATION WITH RESPECT TO PRIOR PERIODS

Certain financial information and utilization data set forth herein with respect to past periods may differ from what the Hospital has previously reported in earlier disclosure documents. This is generally due to changes in accounting standards and related guidance, or the application of relevant accounting standards, that require a reclassification or restatement of certain items and to adjustments in utilization data that occur in the normal course of patient care or as services are billed and coded.

* * * * *

The information contained in this disclosure report may include statistics and other data relating to the healthcare industry in the United States that have been derived from third party sources. Such statistics and data are not necessarily reflective of current or future industry and market conditions. While the Hospital has no reason to question the accuracy of such statistics and data, such statistics and data have not been independently verified by the Hospital.

INTRODUCTION

General

The New York and Presbyterian Hospital (the “Hospital”), a New York not-for-profit corporation created as a result of the January 1998 merger of The Society of The New York Hospital (“New York Hospital”) and The Presbyterian Hospital in the City of New York (“Presbyterian Hospital”), operates at six campuses in Manhattan and Westchester County, New York. The Hospital serves as the academic and quaternary care hub of a network of health care providers (the “Health Care System”), which, as of August 1, 2016, included 10 acute care hospitals, 2 long-term care facilities, 2 ambulatory sites, and 2 specialty institutions, located in New York and Connecticut. Over the years the Hospital has developed its relationships with the other members of the Health Care System as part of its strategic goal of providing high quality, integrated care throughout the tri-state New York metropolitan area (the “Metropolitan Area”). One of the country’s largest academic medical centers, the Hospital ranked #6 in the 2016-2017 U.S News and World Report annual ranking of the best hospitals in the United States, and was the top-ranked hospital in the Metropolitan Area. The Hospital has developed highly specific, patient-centered models of care to treat its diverse patient populations. The Hospital is the primary clinical teaching facility for two of the country’s leading medical colleges: The Joan and Sanford I. Weill Medical College of Cornell University (“Weill Cornell Medical School”) and the Columbia University College of Physicians & Surgeons (“Columbia University Medical School” and, together with Weill Cornell Medical School, the “Medical Schools”). All members of the Attending Medical Staff of the Hospital hold faculty appointments at one of the Medical Schools.

-1-

New York Presbyterian Foundation, Inc. (“NYPFI”) is an affiliate that is linked to the Hospital through the Hospital’s Board of Trustees. The Hospital also has several affiliated entities that support the Hospital through fundraising and real estate holdings. These affiliated entities (“Supporting Corporations”) include: (i) New York-Presbyterian Fund, Inc. (“Fund, Inc.”), which solicits, receives, invests and administers philanthropic funds for the Hospital and other charitable organizations approved by the Board of Directors of Fund, Inc. and (ii) three real estate holding companies: Royal Charter Properties, Inc., Royal Charter Properties – East, Inc., and Royal Charter Properties – Westchester, Inc. (collectively, the “RCP Corporations”). Another affiliated entity, the New York-Presbyterian Healthcare System, Inc. (“NYPHSI”), serves as the corporate link to a number of the hospitals and other entities that are referred to as “Corporate Members” (as further defined below) of the Regional Hospital Network. NYP Community Programs, Inc. (“Community Programs”), a subsidiary of the Hospital, serves as the parent entity of two of the Hospital’s indirect hospital subsidiaries, NYP/Queens and NYP/Hudson Valley, and NYP Community Services, Inc. (“Community Services” and together with Community Programs, the “NYP Active Parent Corporations”), also a subsidiary of the Hospital, serves as the parent entity of a third indirect hospital subsidiary, NYP/Lawrence. These indirect hospital subsidiaries are referred to as the “Regional Hospitals.” Plans are underway for Community Programs to become the parent entity of NYP/Lawrence, replacing Community Services. Subject to regulatory and other approvals, this is expected to occur by the end of 2016.

In July 2016, Community Programs filed a certificate of need application with the New York State Department of Health (“NYSDOH”) to acquire, and become the active parent of, The New York Methodist Hospital (“NYMH”). Approval from the NYSDOH is required before the acquisition can take place. The Hospital expects such approval will be granted during 2016.

Hospital Campuses

The Hospital owns and operates one of the oldest hospitals in the nation. It has a history of over 200 years of providing medical care in the Metropolitan Area, with five of the Hospital’s six campuses having roots dating back more than 120 years.

Weill Cornell Campus

The Weill Cornell Campus now occupies the city blocks bounded by East 68th Street to East 71st Street and from York Avenue to the East River, together with various buildings in the area. Portions of the buildings that comprise the Weill Cornell Campus are owned and/or occupied by Weill Cornell Medical School. The Hospital has 862 certified inpatient beds at its facilities on the Weill Cornell Campus. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School.

Westchester Division

The Westchester Division, which has 270 certified beds, provides inpatient and outpatient psychiatric and behavioral health services. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School.

Lower Manhattan Hospital

The Hospital’s newest campus, NewYork-Presbyterian Lower Manhattan Hospital (“Lower Manhattan Hospital”), is now located at 170 William Street, Manhattan, and is the only acute care facility in Manhattan below 14th Street. It has 180 certified beds. Lower Manhattan Hospital became part of the Hospital in July 2013 when New York Downtown Hospital, then a separate member of the Health Care System, was merged into the Hospital. The attending physicians at this campus hold faculty appointments at the Weill Cornell Medical School.

-2-

Columbia Campus

The Columbia Campus now occupies the city blocks bounded by West 165th Street to West 168th Street and from Broadway to Riverside Drive, together with various other buildings in the area. Portions of the buildings that comprise the Columbia Campus are owned and/or occupied by Columbia University Medical School. The Hospital has 738 certified beds at its facilities on this campus. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School.

Morgan Stanley Children’s Hospital

The Morgan Stanley Children’s Hospital of NewYork-Presbyterian (“MSCHONY”) is a pediatric acute care and ancillary services facility with 269 certified beds, and is located on a site contiguous with the Columbia Campus. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School.

Allen Hospital

The Allen Hospital, which has 196 certified beds and is located at Broadway and the Harlem River in the Inwood section of Manhattan, opened in 1988 under the sponsorship of Presbyterian Hospital and offers acute care to residents of its service area in a community-based setting. The attending physicians at this campus hold faculty appointments at the Columbia University Medical School.

Debt Structure

The Hospital’s long-term indebtedness can be categorized into four groups: (1) the FHA-Insured Indebtedness, (2) the Lower Manhattan Indebtedness, (3) the Master Trust Indenture (MTI) Indebtedness and (4) Other Indebtedness. As discussed below, the FHA-Insured Indebtedness and the Lower Manhattan Indebtedness are secured by mortgages on certain of the Hospital’s facilities and pledges of revenues and accounts. The MTI Indebtedness is unsecured.

The FHA-Insured Indebtedness

The Hospital’s FHA-Insured Indebtedness is secured by mortgages on the Weill Cornell Campus, the Columbia Campus, Morgan Stanley Children’s Hospital, Allen Hospital and the Westchester Division (the “FHA-Insured Mortgages”), and a pledge of revenues and accounts of the Hospital. Under the loan documents for the FHA-Insured Mortgages (the “FHA Loan Documents”), the Hospital is required to maintain certain debt service funds, including mortgage reserve funds. In addition, the Hospital is required to maintain debt service coverage and other financial ratios, and to obtain approval to incur additional debt above specified levels if certain covenant requirements are not met. Under the terms of the FHA Loan Documents, the Hospital is eligible for enhanced status which provides greater flexibility in its financial operations and ability to incur both short-term and long-term debt. The Hospital’s eligibility for the enhanced status is based on its historically strong financial performance. If that enhanced status is revoked in the future, the Hospital may be required to enter into one or more deposit account control agreements to perfect the FHA-insured mortgagees’ security interests in the Hospital’s deposit accounts and the ability of the Hospital to incur additional debt may be restricted.

The terms and provisions of the FHA Loans Documents are solely for the benefit of the parties thereto and may be amended or waived in accordance with their terms, without the consent of or notice to any other creditors of the Hospital.

-3-

The Lower Manhattan Indebtedness

The Lower Manhattan Indebtedness relates to the Secured Hospital Revenue Refunding Bonds (New York Downtown Hospital), Series 2011, which were issued by the Dormitory Authority of the State of New York (“DASNY”). This debt is secured by a mortgage on the Lower Manhattan Hospital facility (the “Lower Manhattan Mortgage”) and a security interest in the gross receipts and certain fixtures, furnishings and equipment of the Hospital. Pursuant to a Subordination Agreement, dated as of June 28, 2013 (the “DASNY Subordination Agreement”), DASNY agreed to subordinate its interest in the Hospital’s gross receipts to the security interests granted under the FHA Loan Documents. In the event of a default under the Lower Manhattan Mortgage loan documents, subject to the DASNY Subordination Agreement, DASNY is entitled to exercise certain rights as a secured party, including the right to accelerate the Lower Manhattan Indebtedness and foreclose on the lien of the Lower Manhattan Mortgage. The proceeds of the exercise of any such rights would be applied to the payment of the Lower Manhattan Indebtedness prior to the payment of any other indebtedness of the Hospital.

The MTI Indebtedness

The Hospital formed an Obligated Group under and as defined in the Master Trust Indenture, dated as of January 1, 2015 (the “Master Trust Indenture”), between the Hospital and TD Bank, N.A., as master trustee (the “Master Trustee”). Indebtedness evidenced by an Obligation issued under the Master Trust Indenture constitutes a joint and several obligation of the Hospital and any entity that may in the future become a Member of the Obligated Group (as defined in the Master Trust Indenture), subject to the right of a Member to withdraw from the Obligated Group upon meeting certain conditions set forth in the Master Trust Indenture. Currently, the Hospital is the only Member of the Obligated Group, and there are two Obligations issued under the Master Trust Indenture: (i) Obligation 1, which was issued to TD Bank, N.A., as bond trustee for the Hospital’s Taxable Bonds, Series 2015 (the “Series 2015 Bonds”), and (ii) Obligation 2, which was issued to TD Bank, N.A., as bond trustee for the Hospital’s Taxable Bonds, Series 2016 (the “Series 2016 Bonds”). The Series 2015 Bonds were issued on February 5, 2015 in the amount of $750.0 million. Obligation No. 1 was issued under and pursuant to the Master Trust Indenture and the Supplemental Master Indenture for Obligation No. 1, dated as of January 1, 2015 (“Supplemental Indenture No. 1”), between the Hospital and the Master Trustee. The Series 2016 Bonds were issued on June 28, 2016 in the amount of $850.0 million. Obligation No. 2 was issued under and pursuant to the Master Trust Indenture and the Supplemental Master Indenture for Obligation No. 2, dated as of June 1, 2016 (“Supplemental Indenture No. 2”), between the Hospital and the Master Trustee. Pursuant to Supplemental Indenture No. 1 and Supplemental Indenture No. 2, the Hospital has agreed not to withdraw from the Obligated Group as long as Obligation No. 1 or Obligation No. 2 remains outstanding.

The Master Indenture does not impose any financial or other tests as a condition to the issuance of additional Obligations, which may be issued from time to time without restriction. The Master Trust Indenture does not grant a security interest in or lien on any property or revenue of the Hospital or any future Members of the Obligated Group to secure the Obligations. Accordingly, Obligation No. 1 and Obligation No. 2 are unsecured. The Master Trust Indenture permits the Members of the Obligated Group to secure Indebtedness, including any additional Obligations, so long as the lien granted is a Permitted Lien under the Master Trust Indenture.

Other Indebtedness

The Hospital has various capital leases totaling $55.7 million as of June 30, 2016, which are secured by the financed equipment. In addition the Hospital has a $100.0 million unsecured line of credit with a commercial bank that expires on June 30, 2017. As of the date of this Disclosure Report, no draws have been made under this line of credit.

-4-

The Intercreditor Agreement

The U.S. Department of Housing and Urban Development, Prudential Huntoon Paige Associates, LLC, DASNY, the Master Trustee, the Series 2015 Bond Trustee and the Series 2016 Bond Trustee have entered into an intercreditor agreement (the “Intercreditor Agreement”). The Intercreditor Agreement provides for the cross-default under certain conditions of the FHA-Insured Indebtedness and the Lower Manhattan Indebtedness (collectively, the “Senior Debt”) with the Series 2015 Bonds and the Series 2016 Bonds, and sets forth the terms as to the subordinate and junior nature of the Series 2015 Bonds and the Series 2016 Bonds with respect to the Senior Debt.

FINANCIAL AND OPERATING INFORMATION

Utilization

A summary of historical utilization data for the quarters and six months ended June 30, 2016 and 2015 for the Hospital is presented in the following table:

HISTORICAL UTILIZATION OF THE HOSPITAL

Quarter Ended Six-Months Ended 6/30/2016 6/30/2015 6/30/2016 6/30/2015 Certified Beds (at end of period) 2,515 2,503 2,515 2,503 Staffed Beds (at end of period) 2,399 2,374 2,399 2,374 Discharges1 27,872 27,475 55,446 53,678 Patient Days1 180,687 176,522 367,172 354,012 Staffed Bed Days Available 218,309 216,034 436,618 429,694 Average Length of Stay (days)2 6.14 6.02 6.22 6.10 Case Mix Index – Medicare 2.10 2.09 2.10 2.02 Case Mix Index - Hospital wide3 1.62 1.59 1.62 1.58 Average Occupancy (%)4 82.8% 81.7% 84.1% 82.4% Emergency Room Visits 5 71,531 69,976 144,559 136,163 Outpatient Clinic Visits 164,756 175,014 328,265 332,521 Ambulatory Surgery Procedures 26,604 25,877 51,688 48,839 Mental Health Clinic Visits 29,723 30,965 59,338 60,004

______Source: Hospital records.

1 Excludes newborns. 2 Excludes psychiatry, rehabilitation, normal newborn, uncoded and LOS greater than 300 days. 3 Hospital wide CMI is calculated using the payor specific cost weight (APR, AP or MSDRG). 4 Occupancy percentages based on staffed bed days available. 5 Includes only patients seen in the emergency room and not admitted.

-5-

Sources of Patient Service Revenue

The majority of patient services revenue received by the Hospital is derived from programs that are either insured or administered by third-party organizations. The following table reports the percentage of net patient service revenue by payor source for the quarters and six months ended June 30, 2016 and 2015. Percent of Hospital’s Net Patient Service Revenue by Payor Source

Quarter Ended Six-Months Ended 6/30/2016 6/30/2015 6/30/2016 6/30/2015 Payor Medicare1 26.0% 25.7% 26.0% 25.8% Medicaid1 17.5% 16.9% 17.5% 17.6% Commercial 55.9% 56.8% 55.9% 56.0% Self Pay & Other 0.6% 0.6% 0.6% 0.6% 2 100% 100% 100% 100% Total Source: Hospital records 1. Medicare includes Medicare Advantage and Medicaid includes Medicaid Managed Care. 2. Totals may not foot due to rounding.

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.

-6-

Summary Statements of Operations and of Financial Position

Summary statements of operations and financial position for the Hospital are set forth below. The unaudited information in the summary statements of operations for the quarters and six months ended June 30, 2016 and 2015 and in the summary statement of financial position at June 30, 2016 are derived from unaudited interim consolidated financial statements. Such unaudited consolidated information includes all adjustments, consisting of normal recurring accruals, which the Hospital considers necessary for a fair presentation of the financial position and the results of operations for these periods. The results for the quarter and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2016.

Effective July 1, 2014, Community Services, and its subsidiary, NYP/Lawrence, became subsidiaries of the Hospital. Effective January 26, 2015, Community Programs and its subsidiary, NYP/Hudson Valley Hospital, became subsidiaries of the Hospital, and effective July 1, 2015, NYP/Queens became another subsidiary of Community Programs and the Hospital. From those respective dates the financial results of each of these subsidiaries are reflected in the consolidated financial statements of the Hospital, except that the financial results of NYP/Queens are reflected from January 1, 2014. However, the financial results and utilization data of these subsidiaries are not reflected in the information presented in this disclosure report. Community Services, Community Programs, NYP/Lawrence, NYP/Hudson Valley and NYP/Queens are not Members of the Obligated Group. None of these entities has any financial or operating obligation under the Master Trust Indenture or any Bond Indenture to which the Hospital is a party, and none of their assets or revenue is legally committed to the repayment of any of the debt of the Hospital, including the Series 2015 Bonds, the Series 2016 Bonds, Obligation No. 1 or Obligation No. 2.

-7-

SUMMARY STATEMENTS OF OPERATIONS OF THE HOSPITAL (in thousands)

Quarter Ended Six-Months Ended 6/30/16 6/30/15 6/30/16 6/30/15

Operating Revenues Net patient service revenue $1,255,860 $1,162,134 $2,494,631 $2,245,107 Provision for bad debts (15,300) (14,580) (30,600) (29,157) Net patient service revenue, less provision for bad debts 1,240,560 1,147,554 2,464,031 2,215,950 Other revenue 68,430 67,867 139,178 131,236 Total operating revenues 1,308,990 1,215,421 2,603,209 2,347,186

Operating Expenses Salaries and wages 581,975 533,506 1,152,155 1,055,115 Employee benefits 163,372 150,268 322,474 300,163 Supplies and other expenses 405,461 374,876 796,545 723,219 Interest and amortization of deferred financing fees 15,685 17,076 31,898 32,164 Depreciation and amortization 67,859 65,134 135,717 129,410 Total operating expenses 1,234,352 1,140,860 2,438,789 2,240,071

Operating income 74,638 74,561 164,420 107,115

Investment return 37,372 (3,405) 57,864 34,607

Excess of revenue over expenses 112,010 71,156 222,284 141,722

Other changes in unrestricted net assets: Net asset transfer to related parties (13,498) - (15,576) - Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 27,151 10,378 58,365 54,376 Change in pension and postretirement benefit liabilities to be recognized in future periods (40,026) 91,211 (134,210) 59,940

Change in unrestricted net assets $ 85,637 $ 172,745 $ 130,863 $ 256,038

______Source: Unaudited Interim Consolidated Financial Statements of the Hospital for the quarters and six months ended June 30, 2016 and 2015 and Hospital records. Amounts exclude Community Services and Community Programs, and their respective subsidiaries.

-8-

SUMMARY STATEMENTS OF FINANCIAL POSITION OF THE HOSPITAL (in thousands)

June 30, December 31, 2016 2015 Assets Current assets: Cash and cash equivalents $ 330,699 $ 227,515 Short-term investments 1,109,235 1,087,581

Patient accounts receivable, net 554,121 516,992 Other current assets 129,033 114,249 Assets limited as to use - current portion 28,158 29,640 Professional liabilities insurance recoveries receivable and related deposit - current portion 67,304 69,322 Beneficial interest in net assets held by related organizations - current portion 66,510 73,635 Due from related organizations - net 20,198 7,427 Total current assets 2,305,258 2,126,361

Assets limited as to use - noncurrent 2,887,834 2,120,717 Property, buildings and equipment - net 2,754,498 2,546,518 Other noncurrent assets - net 2,749 3,029 Professional liabilities insurance recoveries receivable and related deposit - noncurrent 172,283 171,702 Beneficial interest in net assets held by related organizations - noncurrent 1,626,351 1,659,973

Total assets $ 9,748,973 $ 8,628,300

______Source: Unaudited Interim Consolidated Financial Statements of the Hospital as of June 30, 2016, Supplementary information accompanying the Audited Financial Statements of the Hospital as of December 31, 2015 and Hospital records. Amounts exclude Community Services and Community Programs, and their respective subsidiaries.

-9-

SUMMARY STATEMENTS OF FINANCIAL POSITION OF THE HOSPITAL (continued) (in thousands)

June 30, December 31, 2016 2015 Liabilities and net assets Current liabilities: Long-term debt - current portion $ 54,731 $ 55,375 Accounts payable and accrued expenses 459,832 390,604 Accrued salaries and related liabilities 202,492 216,114 Pension and postretirement benefit liabilities - current portion 16,014 16,014 Professional liabilities and other - current portion 67,304 69,322 Other current liabilities 195,640 182,351 Total current liabilities 996,013 929,780

Long-term debt 2,475,456 1,651,884 Professional liabilities and other 312,724 309,468 Pension liability 306,641 182,432 Postretirement benefit liability 23,820 23,846 Deferred revenue 1,888 2,266 Other noncurrent liabilities 303,372 289,682 Total liabilities 4,419,914 3,389,358

Net assets: Unrestricted 3,636,197 3,505,334 Temporarily restricted - held by related organizations 1,448,884 1,486,642 Permanently restricted - held by related organizations 243,978 246,966 Total net assets 5,329,059 5,238,942

Total liabilities and net assets $ 9,748,973 $ 8,628,300

-10-

Liquidity

The following table sets forth the Hospital’s days cash on hand based on unrestricted cash and investments and average daily operating expenses as of June 30, 2016 and December 31, 2015 derived from the Hospital’s interim unaudited consolidated financial statements for the six months ended June 30, 2016 and the audited consolidated financial statements for the year ended December 31, 2015. The table excludes Community Services and Community Programs, and their respective subsidiaries.

DAYS CASH ON HAND OF THE HOSPITAL

($ in thousands)

Six Months Ended Year Ended June 30, December 31 , 2016 2015

Unrestricted cash and investments (1) $3,943,689 $2,942,748

Average daily operating expenses (2) 12,654 11,733

Days cash on hand(3) 311.7 250.8 ______1. Includes all cash and cash equivalents, short-term investments, funded depreciation investments, board designated funds required by the Department of Housing and Urban Development to be so designated in connection with the Hospital’s 2013 FHA-insured mortgage loan and investments made with proceeds of the Series 2015 and 2016 Bonds, but excluding any donor restricted funds and other third party restricted funds. The Hospital expects to make loans to certain of the Regional Hospitals in the next few months in an aggregate amount of approximately $525.0 million. If, as is expected, these loans are made, it would decrease the unrestricted cash and investments of the Hospital by this amount. 2. Total operating expenses for the period less depreciation and amortization, divided by 182 for the six months ended June 30, 2016 and divided by 365 for the year ended December 31, 2015. 3. Unrestricted cash and investments divided by average daily operating expenses.

-11-

The following table sets forth the Hospital’s unrestricted cash and investments to long-term debt as of June 30, 2016 derived from its unaudited consolidated financial statements as of and for the six months then ended and as of December 31, 2015 derived from its audited financial statements as of and for the year then ended. The table excludes Community Services and Community Programs, and their respective subsidiaries.

CASH TO DEBT OF THE HOSPITAL

($ in thousands)

June 30, December 31, 2016 2015

Unrestricted cash and investments (1) $3,943,689 $2,942,748

Long-term debt: Bonds $2,533,357 1,706,659 Other long-term debt(2) 55,738 53,608 Total long-term debt 2,589,095 1,760,267 Less: Current portion of long-term debt(2) (59,156) (59,923) Net long-term debt 2,529,939 1,700,344

Unrestricted cash and investments to 155.9% 173.1% Long-term debt ______1. Includes all cash and cash equivalents, short-term investments, funded depreciation investments, board designated funds required by the Department of Housing and Urban Development to be so designated in connection with the Hospital's 2013 FHA-insured mortgage loan and investments made with proceeds of the Series 2015 and 2016 Bonds, but excluding any donor restricted funds and other third party restricted funds. The Hospital expects to make loans to certain of the Regional Hospitals in the next few months in an aggregate amount of approximately $525.0 million. If, as is expected, these loans are made, it would decrease the unrestricted cash and investments of the Hospital by this amount. 2. Includes capitalized leases and excludes deferred financing costs which are reported net in current and long-term debt.

-12-

Long-Term Debt Service Coverage

The following table sets forth the debt service coverage based on maximum annual debt service for the Hospital for the six months ended June 30, 2016 and year ended December 31, 2015. The table excludes Community Services and Community Programs, and their respective subsidiaries.

LONG-TERM DEBT SERVICE COVERAGE OF THE HOSPITAL

($ in thousands)

June 30, Decem ber 31,

2016 2015 Income available for debt service1: Change in unrestricted net assets $ 130,863 $ 265,670 Depreciation and amortization 135,717 262,098 Interest expense (including receipts and payments related to derivative instruments) 31,898 65,799 Net assets received from Fund, Inc. for the purchase of fixed assets (58,365) (105,460) Gain or (loss) from sale or disposition of assets not in the ordinary course of business - 10,748 Gain or (loss) from pension termination settlements or curtailments - 283 Change in unrealized gains and losses on investments (45,886) 73,778 Equity in income on alternative investments (4,845) 18,856 Change in pension liability to be recognized in future periods 134,210 8,752 Total $ 323,592 $ 600,524 Annualized Total 647,184

Pro-Forma Maximum annual debt service2 189,860 189,860 Pro-Forma Coverage 3.4x 3.2x

______

Notes: 1. Income available for debt service is determined in accordance with the Master Trust Indenture. Line items not relevant to these periods are omitted. 2. Pro-Forma maximum annual debt service for the six months ended June 30, 2016 and the fiscal year ended December 31, 2015 is determined giving effect to (i) the issuance of the Series 2015 Bonds, and assumes level debt service on the Series 2015 Bonds over 30 years with the first principal payment payable in the fiscal year ending December 31, 2016 and (ii) the issuance of the Series 2016 Bonds, and assumes level debt service on the Series 2016 Bonds over 30 years with the first principal payment in the fiscal year ending December 31, 2017. The Series 2015 Bonds in fact require no payment of principal until their maturity in 2045. The Series 2016 Bonds require no payment of principal until the maturity of first term bond in 2036.

-13-

Capitalization

The following table sets forth the historical capitalization of the Hospital as of June 30, 2016 and December 31, 2015. The table excludes Community Services and Community Programs, and their respective subsidiaries.

CAPITALIZATION OF THE HOSPITAL

($ in thousands)

June 30, December 31, 2016 2015 Long-term debt: Bonds $ 2,533,357 $ 1,706,659 Other long-term debt(1) 55,738 53,608 Total long-term debt 2,589,095 1,760,267 Less: Current portion of (59,156) (59,923) long-term debt(1) Net long-term debt(1) 2,529,939 1,700,344

Unrestricted net assets 3,636,197 3,505,334

Total capitalization 6,166,136 5,205,678

Long-term debt to total capitalization 41.0% 32.7% ______

1. Includes capitalized leases and excludes deferred financing costs which are reported net in current and long-term debt.

-14-

Management’s Discussion and Analysis of Utilization

Quarter ended June 30, 2016 compared to quarter ended June 30, 2015

For the quarter ended June 30, 2016, the Hospital inpatient discharges increased 397 cases or 1.4% compared to the same period in 2015. This is partially attributable to new physician recruits across various services and the addition of new clinical programs at various campuses.

Emergency Room visits increased 1,555 visits or 2.2% compared to the same period in 2015 primarily due to the completion of the second phase of a multi-phase renovation and expansion of the Milstein Emergency Department at the Columbia Campus, increase in flu related volume and increase in psychiatric volume.

Outpatient Clinic visits decreased 10,258 visits or 5.9% compared to the same period in 2015 primarily due to decreased volumes at the primary care offsite clinics, specialty and HIV clinics related to the difficulty recruiting doctors as a result of the shortage in primary care physicians and the elimination of neurology, urology and orthopedic clinics at the Allen Hospital.

Ambulatory Surgery procedures increased 727 cases or 2.8% compared to the same period in 2015 primarily due to an increase in outpatient cardiac catheterization volume, in part due to opening of a new catheterization lab in Westchester County. In addition, there were increases in ambulatory surgeries and endoscopies at the Columbia and Cornell campuses.

Mental Health Clinic visits decreased 1,242 visits or 4.0% compared to the same period in 2015 primarily due to the closure of the Day Hospitalization program at the Westchester Division, this is partially being offset by the increase in the pediatric psychiatric program at the Columbia Campus.

Six months ended June 30, 2016 compared to six months ended June 30, 2015

For the six months ended June 30, 2016, the Hospital’s inpatient discharges increased 1,768 cases or 3.3% compared to the same period in 2015. This is partially attributable to new physician recruits across various services and the addition of new clinical programs at various campuses.

Emergency Room visits increased 8,396 visits or 6.2% compared to the same period in 2015 primarily due to the completion of the second phase of a multi-phase renovation and expansion of the Milstein Emergency Department at the Columbia Campus, increase in flu related volume and increase in psychiatric volume.

Outpatient Clinic visits decreased 4,256 or 1.3% compared to the same period in 2015 primarily due to decreased volumes at the primary care offsite clinics, specialty and HIV clinics related to the difficulty recruiting doctors as a result of the shortage in primary care physicians and the elimination of neurology, urology and orthopedic clinics at the Allen Hospital.

Ambulatory Surgery procedures increased 2,849 cases or 5.8% compared to the same period in 2015 primarily due to an increase in outpatient cardiac catheterization volume, resulting from the opening of a new catheterization lab in Westchester County. In addition, there were increased ambulatory surgery volumes at the Columbia Campus and Lower Manhattan Campus as a result of new physician recruits across various programs.

Mental Health Clinic visits decreased 666 visits or 1.1% compared to the same period in 2015 was driven primarily by the closure of the Day Hospitalization program at the Westchester Division, this is partially being offset by the increase in the pediatric psychiatric visits at the Columbia Campus.

-15-

Management’s Discussion and Analysis of Recent Financial Performance

Quarter ended June 30, 2016 compared to Quarter ended June 30, 2015

For the quarter ended June 30, 2016, the Hospital had operating income of $74.6 million, consistent with the same period in 2015. Excess of revenues over expenses was $112.0 million, which represented a $40.9 million or 57.4% increase over the same period in 2015. This increase was attributed to the increase in investment return of $40.8 million.

For the quarter ended June 30, 2016, net patient service revenue, less provision for bad debt, increased $93.0 million or 8.1% over the same period the previous year. This increase was driven primarily due to higher utilization across most of the inpatient services, realizing higher rates, a higher case mix and increased outpatient activity across most outpatient services.

For the quarter ended June 30, 2016, other revenue was consistent with the same period in 2015.

For the quarter ended June 30, 2016, total operating expenses increased $93.5 million or 8.2% compared with the same period in the previous year. Salaries and benefits increased $61.6 million or 9.0% over the same period in the previous year. This increase is primarily a function of having 1,025 more full time equivalents to accommodate increased patient days, investments in care coordination, population health improvements, information technology and innovation, expanded emergency services and new clinical initiatives, most notably the spine programs at the Allen Hospital and Lower Manhattan Hospital, coupled with the corresponding increase in benefits and wage increases.

For the quarter ended June 30, 2016, supplies and other expenses increased $30.6 million or 8.2% over the previous year. This increase was primarily due to an increase in medical and surgical supplies resulting from higher inpatient discharges, higher outpatient activity and surgical procedures and pharmaceuticals resulting from more ambulatory oncology visits. Interest and amortization of deferred fees decreased by $1.4 million or 8.1%. Depreciation expense increased $2.7 million or 4.2% reflecting the completion of a number of Hospital capital projects.

Six months ended June 30, 2016 compared to six months ended June 30, 2015

For the six months ended June 30, 2016, the Hospital had operating income of $164.4 million, a $57.3 million or 53.5% increase over the same period in 2015. Excess of revenues over expenses was $222.3 million, which represented an $80.6 million or 56.8% increase over the same period in 2015.

For the six months ended June 30, 2016, net patient service revenue, less provision for bad debt, increased $248.1 million or 11.2% over the same period the previous year. This increase was driven primarily due to higher utilization across most of the inpatient services, realizing higher rates, a higher case mix and increased outpatient activity across most outpatient services.

For the six months ended June 30, 2016, other revenue increased $7.9 million or 6.1% over the same period in 2015, due primarily to increased distributions from provider owned plans.

For the six months ended June 30, 2016, total operating expenses increased $198.7 million or 8.9% compared with the same period in the previous year. Salaries and benefits increased $119.4 million or 8.8% over the same period in the previous year. This increase is primarily a function of having 1,058 more full time equivalents to accommodate increased patient days, investments in care coordination, population health improvements, information technology and innovation, expanded emergency services and new clinical initiatives, most notably the spine programs at the Allen Hospital and Lower Manhattan Hospital, coupled with the corresponding increase in benefits and wage increases.

-16-

For the six months ended June 30, 2016, supplies and other expenses increased $73.3 million or 10.1% over the previous year. This increase was primarily due to an increase in medical and surgical supplies resulting from higher inpatient discharges, higher outpatient activity and surgical procedures and pharmaceuticals resulting from more ambulatory oncology visits. Interest and amortization of deferred fees decreased by $0.3 million or 0.8%. Depreciation expense increased $6.3 million or 4.9% reflecting the completion of a number of Hospital capital projects.

Outstanding Long-term Indebtedness

A summary of long-term indebtedness of the Hospital as of June 30, 2016 and December 31, 2015 is set forth in the following table. The table excludes Community Services and Community Programs, and their respective subsidiaries.

OUTSTANDING LONG-TERM INDEBTEDNESS OF THE HOSPITAL (in thousands)

Outstanding at June 30, December 31, Indebtedness Maturity Date 2016 2015

FHA-Insured Mortgage Loan (fixed rate, taxable) 2025 $ 209,057 $ 218,404 Mortgage Loan (fixed rate, taxable) 2035 232,704 237,341 Mortgage Loan (fixed rate, taxable) 2038 468,301 474,359

MTI Series 2015 Bonds (fixed rate, taxable) 2045 750,000 750,000 Series 2016 Bonds (fixed rate, taxable) 2036 250,000 - Series 2016 Bonds (fixed rate, taxable) 2056 350,000 - Series 2016 Bonds (fixed rate, taxable) 2116 250,000 -

Lower Manhattan Hospital Dormitory Authority of the State of New York Secured Hospital Revenue Refunding Bonds, Series 2011 (fixed rate, tax-exempt) 2022 23,295 26,555

Other Capitalized leases 55,738 53,608

Total $ 2,589,095 $ 1,760,267

Add: Unamortized fair value adjustment related to NYP/Lower Manhattan acquisition 1,109 1,289 Less: Deferred financing cost, net of accumulated amortization 60,017 54,297

Total $ 2,530,187 $ 1,707,259

The Hospital has a $100.0 million committed unsecured line of credit agreement with a bank that expires on June 30, 2017. No amounts have been drawn on this facility. This is a 364-day line of credit that is generally renewed annually.

-17-

Investments

The following is a summary table of the Hospital’s cash and investment assets, including the Hospital’s beneficial interest in net assets held by related organizations as of June 30, 2016. The table excludes Community Services and Community Programs, and their respective subsidiaries.

CASH AND INVESTMENT ASSETS OF THE HOSPITAL

Total Beneficial Hospital Investment Assets Interest Assets Total (in billions) $5.6 $1.2 $4.4

Cash 21% 2% 27% Treasuries 14 10 15 Public Equity 24 39 20 Private Equity 7 16 4 Real Estate 3 6 2 Natural Resources 4 8 3 Hedge Funds 8 19 4 Credit 19 0 25 100 % 100 % 100 % ______Source: Hospital records.

For long-term funds, the Hospital has adopted a return-oriented, well-diversified asset allocation strategy. Results for the long-term investment funds have generally outperformed benchmarks.

The above table detailing the Hospital’s investment assets, including the Hospital’s beneficial interest in net assets held by related organizations comprises the majority of the investment assets under the purview of the Investment Committee and Investment Staff. The Hospital component includes investments limited as to use, including funded depreciation, funds held under loan agreements, and funded self-insurance. The Hospital component also includes short-term and cash equivalent investments maintained for purposes of operations and other needs of the Hospital, escrow funds, and other assets. The beneficial interest component is almost entirely comprised of the Hospital’s beneficial interest in Fund, Inc. The table does not include investments held by the Hospital’s pension plan, which is invested similar to other long-term assets.

The following table shows, as of June 30, 2016, the liquidity of the Hospital’s investment portfolio, with 82% or $4.6 billion of assets accessible within one month. Pension assets are not included. The table excludes Community Services and Community Programs, and their respective subsidiaries.

LIQUIDITY OF HOSPITAL’S INVESTMENT PORTFOLIO

Hospital Hospital Long-Term Fund Current Investments Total 1-5 Days 47 % 100% 79 % 6-31 Days 7 N/A 3 1-6 Months 10 N/A 4 7-12 Months 5 N/A 2 1-3 Years 3 N/A 1 3+ Years 28 N/A 11 Total 100 % 100% 100 % ______Source: Hospital records.

-18-

The following table shows (i) the amount of investment assets of the Hospital under management as of June 30, 2016, and as of December 31, 2015, and (ii) the investment performance of the long-term portfolio through June 30, 2016. The table excludes Community Services and Community Programs, and their respective subsidiaries.

As As of As of June 30, December 31 , 2016 2015 Investment Assets Under Management $5.6 $ 4.8 (in billions)

5 5 Year 3 Year 1 Year

Long-Term Portfolio Performance through 4.8% 4.7% -2.1% 6/30/16 ______Source: Hospital records.

Philanthropy

In 2007, after completing a $1.0 billion campaign three years ahead of schedule, the Hospital, through Fund, Inc., began the Quiet Phase of a $2.0 billion campaign. This campaign was publicly launched in 2012. As of June 30, 2016, over $882.6 million in pledges and gifts have been made towards this campaign since its public launch date. When considering pledges and gifts received during the Quiet Phase of the campaign, as of December 31, 2015 the Hospital has received pledges and gifts of $1.6 billion against the $2.0 billion campaign. An additional campaign has been launched to raise $300 million for the Cohen Hospital for Women and Children. As of June 30, 2016, the Hospital has received pledges and gifts of $77.9 million for this campaign. The collection rate for pledges, based on recent history, has been close to 100%.

Fund, Inc.

During the six months ended June 30, 2016 and fiscal year ended December 31, 2015, Fund Inc. distributed approximately $58.4 million and $105.5 million, respectively, for the purchase of fixed assets to the Hospital. There is, however, no legal or contractual requirement that Fund Inc. continue to make distributions of unrestricted assets to the Hospital. Fund, Inc. also holds certain assets on behalf the Hospital that are restricted and may only be used for the benefit of the Hospital.

Capital Expenditures

For the six months ended June 30, 2016 and year ended December 31, 2015, the Hospital (not including its direct and indirect subsidiaries) incurred capital expenditures of $333.1 million and $492.7 million, respectively, for acquisition of plant, property and equipment (net of disposals). These expenditures were funded from internally generated cash flow, donations and proceeds of loans. For the six months ended June 30, 2016 and year ended December 31, 2015, Fund, Inc. on behalf of the Hospital received approximately $43.5 million and $184.5 million, respectively, in new gifts and pledges from individual, foundation and corporate donors for capital acquisitions and other purposes.

-19-

Royal Charter Properties

For the six months ended June 30, 2016 and the fiscal year ended December 31, 2015, the RCP Corporations had an aggregate net operating income of approximately $25.4 million and $50.3 million, respectively. Historically, on an annual basis, each of the RCP Corporations has turned over its excess of revenue over expenses (“Excess Revenue”) to the Hospital. For the six months ended June 30, 2016 and year ended December 31, 2015, these amounts totaled $24.9 million and $46.6 million, respectively, and are included in other operating revenue in the Statement of Operations of the Hospital. However, the board of directors of each of the RCP Corporations has complete discretion within its stated corporate purposes with respect to the distribution of its Excess Revenue; there is no legal or contractual requirement that these amounts be distributed to the Hospital.

-20-

The New York and Presbyterian Hospital

Unaudited Interim Consolidated Financial Statements and Supplementary Information

As of and For the Six Months Ended June 30, 2016

Contents

Unaudited Interim Consolidated Financial Statements

Unaudited Consolidated Statements of Financial Position ...... 1 Unaudited Interim Consolidated Statements of Operations ...... 3 Unaudited Interim Consolidated Statements of Changes in Net Assets ...... 4 Unaudited Interim Consolidated Statements of Cash Flows ...... 5 Notes to Unaudited Interim Consolidated Financial Statements ...... 6

Supplementary Information

Unaudited Interim Consolidating Statement of Financial Position ...... 20 Unaudited Interim Consolidating Statement of Operations ...... 22

The New York and Presbyterian Hospital

Unaudited Consolidated Statements of Financial Position (In Thousands)

(Unaudited) (Audited) June 30 December 31 2016 2015 Assets Current assets: Cash, cash equivalents and short-term investments: Cash and cash equivalents $ 379,861 $ 276,147 Short-term investments 1,199,319 1,175,753 Total cash, cash equivalents and short-term investments 1,579,180 1,451,900

Patient accounts receivable, less allowance for uncollectibles (2016 – $266,347; 2015 – $252,638) 694,705 659,763 Other current assets 161,677 142,535 Assets limited as to use – current portion 40,178 43,502 Professional liabilities insurance recoveries receivable and related deposit – current portion 69,727 71,745 Beneficial interest in net assets held by related organizations – current portion 66,510 73,635 Due from related organizations – net 4,616 72 Total current assets 2,616,593 2,443,152

Assets limited as to use – noncurrent 3,119,771 2,359,209 Property, buildings, and equipment – net 3,294,856 3,080,559 Other noncurrent assets – net 21,767 20,953 Professional liabilities insurance recoveries receivable and related deposit – noncurrent 203,226 201,672 Beneficial interest in net assets held by related organizations – noncurrent 1,626,351 1,659,973

Total assets $ 10,882,564 $ 9,765,518

Continued on following page. 1

The New York and Presbyterian Hospital

Unaudited Consolidated Statements of Financial Position (continued) (In Thousands) (Unaudited) (Audited) June 30 December 31 2016 2015

Liabilities and net assets Current liabilities: Long-term debt – current portion $ 71,540 $ 72,300 Accounts payable and accrued expenses 536,789 480,644 Accrued salaries and related liabilities 242,298 256,030 Pension and postretirement benefit liabilities – current portion 16,821 16,822 Professional liabilities and other – current portion 77,050 81,264 Other current liabilities 205,885 192,266 Total current liabilities 1,150,383 1,099,326

Long-term debt 2,746,279 1,931,625 Professional liabilities and other 435,851 437,370 Pension liability 454,787 330,090 Postretirement benefit liability 51,364 50,602 Deferred revenue 1,888 2,266 Other noncurrent liabilities 416,532 398,535 Total liabilities 5,257,084 4,249,814

Commitments and contingencies

Net assets: Unrestricted 3,901,194 3,749,026 Temporarily restricted: NYP/Lawrence Hospital 12,178 14,136 NYP/Hudson Valley Hospital 1,614 1,543 NYP/Queens 2,167 1,927 Held by related organizations 1,448,884 1,486,642 Total temporarily restricted 1,464,843 1,504,248 Permanently restricted: NYP/Lawrence Hospital 4,685 4,684 NYP/Hudson Valley Hospital 1,675 1,675 NYP/Queens 9,105 9,105 Held by related organizations 243,978 246,966 Total permanently restricted 259,443 262,430 Total net assets 5,625,480 5,515,704 Total liabilities and net assets $ 10,882,564 $ 9,765,518

See accompanying notes.

The New York and Presbyterian Hospital

Unaudited Interim Consolidated Statements of Operations (In Thousands)

(Unaudited) Six Months Ended June 30 2016 2015 (As Adjusted) Operating revenues Net patient service revenue $ 3,101,911 $ 2,786,844 Provision for bad debts (45,083) (42,460) Net patient service revenue, less provision for bad debts 3,056,828 2,744,384 Other revenue 160,466 152,975 Total operating revenues 3,217,294 2,897,359

Operating expenses Salaries and wages 1,453,147 1,320,094 Employee benefits 412,630 378,294 Supplies and other expenses 988,792 897,952 Interest and amortization of deferred financing fees 38,252 38,943 Depreciation and amortization 158,942 152,114 Total operating expenses 3,051,763 2,787,397

Operating income 165,531 109,962

Investment return 64,260 39,320 Excess of revenues over expenses before inherent contribution of unrestricted net assets received in the acquisition of NYP/Hudson Valley Hospital 229,791 149,282 Inherent contribution of unrestricted net assets received in the acquisition of NYP/Hudson Valley Hospital - 102,818 Excess of revenues over expenses 229,791 252,100

Other changes in unrestricted net assets: Net assets transfer to related parties (3,778) - Net assets released from restrictions for purchase of fixed assets 2,000 - Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 58,365 54,376 Change in pension and postretirement benefit liabilities to be recognized in future periods (134,210) 59,940 Change in unrestricted net assets $ 152,168 $ 366,416

See accompanying notes.

The New York and Presbyterian Hospital

Unaudited Interim 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, 2015, as adjusted $ 3,341,999 $ 20,383 $ 13,784 $ 768,042 $ 542,261 $ 216,944 $ 1,527,247 $ 249,621 $ 5,153,034 Change in unrestricted net assets, as adjusted 366,416 ------366,416 Inherent contribution of restricted net assets received in the acquistion of NYP/Hudson Valley Hospital - 1,323 1,675 - - - - - 2,998 Restricted investment return and other, as adjusted - 55 6 - - - - - 61 Changes in beneficial interest in net assets held by related organizations - - - (35,380) (3,804) (2,663) (41,847) (761) (42,608) Change in net assets for the six months ended June 30, 2015, as adjusted 366,416 1,378 1,681 (35,380) (3,804) (2,663) (41,847) (761) 326,867 Net assets at June 30, 2015, as adjusted $ 3,708,415 $ 21,761 $ 15,465 $ 732,662 $ 538,457 $ 214,281 $ 1,485,400 $ 248,860 $ 5,479,901

Net assets at January 1, 2016 $ 3,749,026 $ 17,606 $ 15,464 $ 753,154 $ 540,439 $ 193,049 $ 1,486,642 $ 246,966 $ 5,515,704 Change in unrestricted net assets 152,168 ------152,168 Restricted investment return and other - (1,647) 1 - - - - - (1,646) Changes in beneficial interest in net assets held by related organizations - - - (7,553) (23,756) (6,449) (37,758) (2,988) (40,746) Change in net assets for the six months ended June 30, 2016 152,168 (1,647) 1 (7,553) (23,756) (6,449) (37,758) (2,988) 109,776 Net assets at June 30, 2016 $ 3,901,194 $ 15,959 $ 15,465 $ 745,601 $ 516,683 $ 186,600 $ 1,448,884 $ 243,978 $ 5,625,480

See accompanying notes.

The New York and Presbyterian Hospital

Unaudited Interim Consolidated Statements of Cash Flows (In Thousands) (Unaudited) Six Months Ended June 30 2016 2015 (As Adjusted) Operating activities Change in net assets $ 109,776 $ 326,867 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 158,942 152,114 Amortization of deferred financing costs and mortgage discount and other 1,628 1,272 Distribution from New York-Presbyterian Fund, Inc. for the purchase of fixed assets (58,365) (54,376) Equity in earnings of common collective/commingled trusts and alternative investments (4,845) (13,339) Net realized losses (gains) on sales of investment companies 15,091 (49,410) Change in unrealized (gains) losses (51,099) 44,538 Change in interest in pooled investments held by New York-Presbyterian Fund, Inc. (224) (529) Equity in income from investee (2,867) (4,416) Inherent contribution received in the acquisition of NYP/Hudson Valley Hospital - (105,816) Net asset transfer to related parties 3,778 - Change in operating assets and liabilities Patient accounts receivable (34,942) (47,259) Other assets (18,689) (34,128) Beneficial interest in net assets held by related organizations 40,747 42,725 Accounts payable and accrued expenses 56,145 19,677 Accrued salaries and related liabilities (13,732) 44,077 Due from related organizations-net (4,544) 22 Other liabilities 31,616 49,164 Professional liabilities and other and related insurance recoveries receivable (5,269) (9,269) Pension and post retirement benefit liabilities 125,458 (53,737) NET CASH PROVIDED BY OPERATING ACTIVITIES 348,605 308,177

Investing activities Net purchases of short term investments (22,563) (25,136) Acquisitions of property, buildings, and equipment (362,604) (272,194) Net purchases of assets limited as to use (717,164) (687,053) Distributions from investee 1,600 - Cash received in acquisition on NYP/Hudson Valley Hospital - 10,312 NET CASH USED IN INVESTING ACTIVITIES (1,100,731) (974,071)

Financing activities Repayments of long-term debt (40,731) (58,318) Proceeds from issuance of long-term debt (8,016) 750,000 Payment of deferred financing costs 850,000 (29,808) Net asset transfer to related parties (3,778) - Distributions from New York-Presbyterian Fund Inc. for the purchase of fixed assets 58,365 54,376 NET CASH PROVIDED BY FINANCING ACTIVITIES 855,840 716,250

NET INCREASE IN CASH AND CASH EQUIVALENTS 103,714 50,356 Cash and cash equivalents at beginning of period 276,147 217,863 Cash and cash equivalents at end of period $ 379,861 $ 268,219

Supplemental disclosure of cash flow information Assets acquired under capital lease obligations $ 10,635 $ 12,435

See accompanying notes. 5

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

1. Organization and Summary of Significant Accounting Policies Interim Financial Statements

The New York and Presbyterian Hospital (the Hospital) presumes that users of this unaudited interim consolidated financial information have read or have access to the Hospital’s audited 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, 2015 and 2014 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 interim consolidated financial information.

In the opinion of management, all adjustments considered necessary for a fair presentation of the results of the interim periods have been included in the accompanying unaudited interim consolidated financial statements. All such adjustments are considered by management to be of a normal, recurring nature, except as noted otherwise.

Patient volumes and net operating revenues are subject to seasonal variations caused by a number of factors, including, but not necessarily limited to, climate and weather conditions, vacation patterns of hospital patients and admitting physicians and other factors relating to the timing of elective hospital procedures. Monthly operating results are not necessarily representative of operations for a full year for various reasons, including levels of occupancy and other patient volumes, interest rates, unusual or non-recurring items and other seasonal fluctuations.

Organization and Basis of Presentation: The accompanying consolidated financial statements include the accounts of The New York and Presbyterian Hospital (NYPH), NYP Community Services, Inc. (NYP Community Services), and NYP Community Programs, Inc. (NYP Community Programs), which NYPH is the sole member of NYP Community Services and NYP 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.

NYP Community Services and NYP Community Programs serve as the active parent organizations for the New York Presbyterian Regional Hospital Network, which currently consists of NYP/Lawrence Hospital, NYP Hudson Valley and NYP/Queens, collectively the “Regional Hospitals”.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

1. Organization and Summary of Significant Accounting Policies (continued)

Hudson Valley Hospital Acquisition: On January 26, 2015 (the Hudson Valley Acquisition Date), NYP Community Programs acquired Hudson Valley Hospital Center, Westchester Putnam Health Management System, Inc. and their subsidiaries (collectively referred to herein as NYP/Hudson Valley or Hudson Valley). Hudson Valley consists of a 128-bed acute care hospital located in Cortlandt Manor, Westchester County, New York, a foundation, a physician practice and certain other entities primarily formed to purchase and lease space. NYP Community Programs acquired NYP/Hudson Valley by means of an inherent contribution, in which no consideration was transferred by NYP Community Programs or the Hospital. NYP Community Programs accounted for this business combination by applying the acquisition method and, accordingly, the inherent contribution received was valued as the excess of the value of NYP/Hudson Valley’s assets over liabilities. In determining the inherent contribution received, all assets and liabilities were measured at fair value as of the Hudson Valley Acquisition Date. The results of Hudson Valley’s operations have been included in the unaudited interim consolidated financial statements since the Hudson Valley Acquisition Date.

New York Hospital Medical Center of Queens Acquisition: On July 1, 2015 (the Queens Acquisition Date), sole membership of The New York Hospital Medical Center of Queens and its controlled affiliates was transferred to NYP Community Programs. NYP Community Programs became the entity’s active parent and renamed it NewYork-Presbyterian/Queens (referred to herein as Queens or NYP/Queens). NYP/Queens consists of a 535-bed acute care hospital located in Queens County, New York, a physician practice and certain other entities. As NYP/Queens and NYPH were entities under common control as of the Queens 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 interim consolidated financial statements as of and for the six months ended June 30, 2016 and 2015 reflect the financial position, operations, changes in net assets and cash flows of the Hospital, including NYP/Queens, as if the acquisition had been completed on January 1, 2014; all relevant disclosures have been adjusted.

New York Hospital Medical Center of Queens Restatement: The 2014 financial statements of New York Hospital Medical Center of Queens have been restated to increase accrued pension and postretirement liabilities by $10.0 million. See New York Hospital Medical Center Queens audited financial statements for the year ended December 31, 2015 posted on EMMA for more details. The information for the six months ended June 30, 2015 also has been adjusted for the restatement.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

1. Organization and Summary of Significant Accounting Policies (continued)

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. 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 financial statements of the Hospital for the years ended December 31, 2015 and 2014, include additional disclosures which describe the Hospital’s accounting for net patient service revenue and related matters.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

1. Organization and Summary of Significant Accounting Policies (continued)

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 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 six months ended June 30, 2016 and 2015, the net effect of the Hospital’s revisions to prior year estimates resulted in net patient service revenue increasing by approximately $18.0 million and $4.4 million, respectively.

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 market-traded 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 consolidated statements of financial position based upon net asset values derived from the application of the equity method of 9

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

1. Organization and Summary of Significant Accounting Policies (continued) 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.

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 is exempt from New York State income taxes. NYPH and NYP/Queens are exempt from New York City income taxes.

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 $42.3 million and $28.1 million to its defined benefit pension plans for the six months ended June 30, 2016 and 2015, respectively. The Hospital expects to contribute approximately $21.7 million to its defined benefit pension plans for the remainder of 2016.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

2. Pension and Similar Benefit Plans (continued)

The Hospital contributed $2.0 million and $1.7 million to its postretirement benefit pension plans for the six months ended June 30, 2016 and 2015, respectively. The Hospital expects to contribute approximately $2.0 million to its postretirement benefit pension plans for the remainder of 2016.

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, 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 six months ended June 30, 2016 and 2015 (in thousands):

Postretirement Pension Plans Benefit Plans 2016 2015 2016 2015 (As adjusted) (As adjusted) (Unaudited) (Unaudited)

Service cost $ 32,569 $ 37,431 $ 524 $ 864 Interest cost 43,833 33,347 745 1,056 Expected return on plan assets (66,044) (52,710) – – Net amortization 176 326 (221) (391) Recognized actuarial loss 29,938 18,863 472 793 Recognized actuarial loss (gain) due to curtailment 139 (1,650) – – Net periodic pension cost and postretirement benefits cost $ 40,611 $ 35,607 $ 1,520 $ 2,322

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

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. Additionally, the entities comprising the Hospital have certain other insurance arrangements, including self-insurance retentions. The notes to the audited consolidated financial statements of the Hospital for the years ended December 31, 2015 and 2014, 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.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

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 June 30, 2016 and December 31, 2015 (in thousands):

June 30, 2016 (Unaudited) Total Level 1 Level 2 Level 3

Cash and cash equivalents – held for investment $ 1,152,896 $ 1,115,579 $ 37,317 $ – Fixed income: U.S. government 814,442 814,442 – – Corporate 483,900 36,239 447,661 – Mortgage and asset backed 374,768 67,146 307,622 – Other 15,446 2,516 12,930 – U.S. equities(a) 103,147 103,147 – – Real assets 67,142 67,142 – – Mutual funds 49,732 49,732 – – $ 3,061,473 $ 2,255,943 $ 805,530 $ –

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

4. Fair Value Measurements (continued) December 31, 2015 (Audited) Total Level 1 Level 2 Level 3

Cash and cash equivalents – held for investment $ 241,016 $ 203,708 $ 37,308 $ – Fixed income: U.S. government 999,251 999,251 – – Non-U.S. government 3,345 3,345 – – Corporate 479,966 7,661 472,305 – Mortgage and asset backed 379,659 – 379,659 – Other 19,997 19,997 – – Equities: U.S. equities(a) 173,417 173,417 – – Non-U.S. equities(b) 58,187 58,187 – – Real assets 43,328 43,328 – – Mutual funds 48,662 48,662 – – $ 2,446,828 $ 1,557,556 $ 889,272 $ –

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).

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

4. Fair Value Measurements (continued)

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 June 30, 2016 and December 31, 2015 (in thousands):

June 30, 2016 (Unaudited) Total Level 1 Level 2 Level 3

Cash and cash equivalents $ 71,487 $ 71,487 $ – $ – Fixed income: U.S. government 142,372 142,372 – – Non-U.S. government 10,129 10,129 – – Equities: U.S. equities(a) 80,665 80,665 – – Non-U.S. equities(b) 1,857 1,857 – – Real assets 47,078 47,078 – – $ 353,588 $ 353,588 – –

Asset measured at net asset value as a practical expedient: Common collective fixed income(c) 38,968 Common collective equity funds (d) 482,155 Hedge funds(e) 189,406 Private equity(f) 162,600 Private real assets(g) 108,508 $ 1,335,225

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

4. Fair Value Measurements (continued) December 31, 2015 (Audited) Total Level 1 Level 2 Level 3

Cash and cash equivalents $ 34,250 $ 34,250 $ – $ – Fixed income: U.S. government 157,661 157,661 – – Non-U.S. government 11,051 11,051 – – Corporate bonds 176 176 – – Equities: U.S. equities(a) 74,204 74,204 – – Non-U.S. equities(b) 1,921 1,921 – – Real assets 32,206 32,206 – – Mutual funds 16,800 16,800 – – $ 328,269 $ 328,269 – –

Asset measured at net asset value as a practical expedient: Common collective fixed income(c) 32,596 Common collective equity funds (d) 466,238 Hedge funds(e) 215,740 Private equity(f) 152,682 Private real assets(g) 112,598 $ 1,308,123

(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) Common collective/commingled trusts invested in corporate bonds and mortgage and asset backed securities. (d) Common collective/commingled trusts invested in common stock of corporations domiciled in the United States and outside the United States, including emerging market countries. (e) 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. (f) Private equity investments include limited partnership investments in funds pursuing strategies in corporate buyouts, venture capital, growth equity, distressed and turnaround investments.

(g) Real estate and natural resources investments.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

4. Fair Value Measurements (continued)

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 June 30, 2016 (including investments accounted for using the equity method) (in thousands):

Redemption Frequency Redemption Description of Fair Unfunded (If Currently Notice Investment Value Commitments Eligible) Period Common collective/ commingled trusts $ 1,347,006 $ – Daily to quarterly 0 to 30 days Hedge funds 364,781 – Monthly to tri-annually 45 to 180 days Private equity 334,675 337,558 * * Private real assets 208,783 235,968 * * $ 2,255,245 $ 573,526

* 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.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

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 June 30, 2016 and December 31, 2015, the fair value of long-term debt obligations totaled approximately $3,021.3 million and $2,085.2 million, 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.

6. Long-Term Debt

In June 2016, NYPH issued $850.0 million in unsecured, taxable bonds. The bonds have three separate final maturity dates, August 1, 2036, August 1, 2056 and August 1, 2116 and bear interest at a fixed rate of 3.6%, 4.1% and 4.8% respectively. NYPH incurred approximately $8.0 million of financing cost in connection with the issuance of the bonds that will be amortized over the life of the bonds using the effective interest method. Bond proceeds that have not been expended are included in assets limited as to use.

7. Subsequent Events

Subsequent events have been evaluated through August 12, 2016, which is the date the interim unaudited consolidated financial statements were issued.

In July 2016, NYP Community Programs filed a certificate of need application with the New York State Department of Health (NYSDOH) to acquire The New York Methodist Hospital (NYMH). Approval from the NYSDOH is required before the acquisition can take place. The Hospital expects such approval will be granted during 2016. As the Hospital and NYMH are entities under common control, the assets and liabilities of NYMH will be transferred to the Hospital at historical cost.

The New York and Presbyterian Hospital

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2016

7. Subsequent Events (continued)

As of June 30, 2016, NYP/Lawrence was not in compliance with certain of the financial covenants of the Series 1998A and 1998B bonds. This noncompliance provides the trustee for the bonds with the ability to accelerate the repayment terms. The trustee, The Bank of New York Mellon, delivered a notice, dated July 28, 2016, to NYP/Lawrence stating that if this noncompliance is not remedied within sixty days of the date of the notice it may constitute an event of default under the financing documents for the bonds. NYP/Lawrence expects to undertake a refinancing transaction resulting in the redemption of all of the $8.9 million of outstanding bonds within the next two months. Based on NYP/Lawrence’s current plans, it would prepay its obligations under the financing documents related to the bonds in full on or before September 15, 2016. With this, the redemption of the bonds would take place in October 2016. NYP/Lawrence’s current plan is to obtain a loan from the Hospital, to provide the funds for the prepayment and redemption. The assets to repay the NYP/Lawrence debt are classified as noncurrent assets and therefore the related debt is classified as long-term debt on the consolidated statement of financial position as of the six months ended June 30, 2016.

19 The New York and Presbyterian Hospital

Supplementary Information as of and for the Six Months Ended June 30, 2016

Consolidating Information

The following table summarizes the unaudited interim consolidating statement of financial position at June 30, 2016 (in thousands):

Non-Obligated Group Obligated NYP Community NYP Community Group Services, Inc. Programs, Inc. NYP/Hudson Eliminations NYPH NYP/Lawrence Valley NYP/Queens / Reclasses Consolidated (Unaudited) Assets Current assets: Cash, cash equivalents and short-term investments: Cash and cash equivalents $ 330,699 $ 21,272 $ 23,414 $ 4,476 $ - $ 379,861 Short-term investments 1,109,235 - 39,031 51,053 - 1,199,319 Total cash, cash equivalents and short-term investments 1,439,934 21,272 62,445 55,529 - 1,579,180

Patient accounts receivable, less allowance for uncollectibles 554,121 35,127 21,697 83,760 - 694,705 Other current assets 129,033 6,484 7,939 18,558 (337) 161,677 Assets limited as to use – current portion 28,158 3,263 - 8,757 - 40,178 Professional liabilities insurance recoveries receivable and related deposit – current portion 67,304 - 2,415 8 - 69,727 Beneficial interest in net assets held by related organizations – current portion 66,510 - - - - 66,510 Due from (to) related organizations - net 20,198 - (936) (11,618) (3,028) 4,616 Total current assets 2,305,258 66,146 93,560 154,994 (3,365) 2,616,593

Assets limited as to use – noncurrent 2,887,834 99,957 9,397 122,583 - 3,119,771 Property, buildings, and equipment – net 2,754,498 129,932 133,153 277,273 - 3,294,856 Other noncurrent assets – net 2,749 - 2,903 16,115 - 21,767 Professional liabilities insurance recoveries receivable and related deposit – noncurrent 172,283 23,056 6,542 1,345 - 203,226 Beneficial interest in net assets held by related organizations – noncurrent 1,626,351 - - - - 1,626,351 Total assets $ 9,748,973 $ 319,091 $ 245,555 $ 572,310 $ (3,365) $ 10,882,564

20 The New York and Presbyterian Hospital

Supplementary Information as of and for the Six Months Ended June 30, 2016

Consolidating Information (continued)

Non-Obligated Group Obligated NYP Community NYP Community Group Services, Inc. Programs, Inc. NYP/Hudson Eliminations/ NYPH NYP/Lawrence Valley NYP/Queens Reclasses Consolidated (Unaudited) Liabilities and net assets Current liabilities: Long-term debt – current portion $ 54,731 $ 3,112 $ 4,821 $ 8,876 $ - $ 71,540 Accounts payable and accrued expenses 459,832 23,836 9,623 46,863 (3,365) 536,789 Accrued salaries and related liabilities 202,492 14,114 10,667 15,025 - 242,298 Pension and postretirement benefit liabilities – current portion 16,014 - - 807 - 16,821 Professional liabilities and other – current portion 67,304 2,242 2,521 4,983 - 77,050 Other current liabilities 195,640 4,525 4,566 1,154 - 205,885 Total current liabilities 996,013 47,829 32,198 77,708 (3,365) 1,150,383

Long-term debt 2,475,456 26,847 70,380 173,596 - 2,746,279 Professional liabilities and other 312,724 38,317 9,866 74,944 - 435,851 Pension liability 306,641 87,861 - 60,285 - 454,787 Postretirement benefit liability 23,820 4,487 - 23,057 - 51,364 Deferred revenue 1,888 - - - - 1,888 Other noncurrent liabilities 303,372 11,858 8,084 93,218 - 416,532 Total liabilities 4,419,914 217,199 120,528 502,808 (3,365) 5,257,084

Net assets: Unrestricted 3,636,197 85,029 121,738 58,230 - 3,901,194 Temporarily restricted: NYP/Lawrence Hospital - 12,178 - - - 12,178 NYP/Hudson Valley Hospital - - 1,614 - - 1,614 NYP/Queens - - - 2,167 - 2,167 Held by related organizations 1,448,884 - - - - 1,448,884 Total temporarily restricted 1,448,884 12,178 1,614 2,167 - 1,464,843 Permanently restricted: NYP/Lawrence Hospital - 4,685 - - - 4,685 NYP/Hudson Valley Hospital - - 1,675 - - 1,675 NYP/Queens - - - 9,105 - 9,105 Held by related organizations 243,978 - - - - 243,978 Total permanently restricted 243,978 4,685 1,675 9,105 - 259,443 Total net assets 5,329,059 101,892 125,027 69,502 - 5,625,480 Total liabilities and net assets $ 9,748,973 $ 319,091 $ 245,555 $ 572,310 $ (3,365) $ 10,882,564

21 The New York and Presbyterian Hospital

Supplementary Information as of and for the Six Months Ended June 30, 2016

Consolidating Information (continued)

The following table summarizes the unaudited interim consolidating statement of operations for the six months ended June 30, 2016 (in thousands):

Non-Obligated Group Obligated NYP Community NYP Community Group Services, Inc. Programs, Inc. NYP/Hudson NYPH NYP/Lawrence Valley NYP/Queens Consolidated (Unaudited) Operating revenues Net patient service revenue $ 2,494,631 $ 135,208 $ 102,850 $ 369,222 $ 3,101,911 Provision for bad debts (30,600) (5,511) (2,295) (6,677) (45,083) Net patient service revenue, less provision for bad debts 2,464,031 129,697 100,555 362,545 3,056,828 Other revenue 139,178 2,717 2,539 16,032 160,466 Total operating revenues 2,603,209 132,414 103,094 378,577 3,217,294

Operating expenses Salaries and wages 1,152,155 69,446 46,322 185,224 1,453,147 Employee benefits 322,474 20,338 10,770 59,048 412,630 Supplies and other expenses 796,545 42,476 31,459 118,312 988,792 Interest and amortization of deferred financing fees 31,898 222 1,219 4,913 38,252 Depreciation and amortization 135,717 4,618 5,955 12,652 158,942 Total operating expenses 2,438,789 137,100 95,725 380,149 3,051,763

Operating income 164,420 (4,686) 7,369 (1,572) 165,531

Investment return 57,864 361 202 5,833 64,260 Excess of revenues over expenses 222,284 (4,325) 7,571 4,261 229,791

Other changes in unrestricted net assets: Net assets transfer to related parties (15,576) 11,798 - - (3,778) Net assets released from restrictions for the purchase of fixed assets - 2,000 - - 2,000 Distributions from New York-Presbyterian Fund, Inc. for the purchase of fixed assets 58,365 - - - 58,365 Change in pension and postretirement benefit liabilities to be recognized in future periods (134,210) - - - (134,210) Change in unrestricted net assets $ 130,863 $ 9,473 $ 7,571 $ 4,261 $ 152,168