NORTHWESTERN MEMORIAL HEALTHCARE AND SUBSIDIARIES Consolidated Financial Statements and Supplementary Information Years Ended August 31, 2020 and 2019 Contents Report of Independent Auditors 1 Consolidated Financial Statements: Consolidated Balance Sheets 3 Consolidated Statements of Operations and Changes in Net Assets 5 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8 Report of Independent Auditors The Board of Directors Northwestern Memorial HealthCare We have audited the accompanying consolidated financial statements of Northwestern Memorial HealthCare and Subsidiaries, which comprise the consolidated balance sheets as of August 31, 2020 and 2019, and the related consolidated statements of operations and changes in net assets and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Northwestern Memorial Healthcare Page 1 of 2 1 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Northwestern Memorial HealthCare and Subsidiaries at August 31, 2020 and 2019, and the consolidated results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Chicago, Illinois December 3, 2020 Northwestern Memorial Healthcare Page 2 of 2 2 Northwestern Memorial HealthCare and Subsidiaries Consolidated Balance Sheets (In thousands) August 31 2020 2019 Assets Current assets: Cash and cash equivalents $ 1,336,516 $ 329,646 Short-term investments 15,474 189,444 Current portion of investments, including assets limited as to use 190,482 171,227 Patient accounts receivable 607,407 791,667 Current portion of pledges and grants receivable, net 17,028 17,393 Current portion of insurance recoverable 28,971 17,433 Inventories 121,999 89,147 Other current assets 172,598 158,763 Total current assets 2,490,475 1,764,720 Investments, including assets limited as to use, less current portion 6,971,079 6,359,161 Property and equipment, at cost: Land 392,078 379,989 Buildings 4,564,669 4,406,214 Equipment and furniture 1,705,261 1,515,862 Construction in progress 138,072 150,896 6,800,080 6,452,961 Less accumulated depreciation 2,825,937 2,487,009 3,974,143 3,965,952 Prepaid pension cost 81,199 71,872 Pledges and grants receivable, less current portion 44,000 49,179 Insurance recoverable, less current portion 133,573 112,040 Right-of-use assets - leases, net 173,422 — Other assets, net 236,737 205,207 Total assets $ 14,104,628 $ 12,528,131 3 August 31 2020 2019 Liabilities and net assets Current liabilities: Accounts payable $ 216,410 $ 264,896 Accrued salaries and benefits 392,710 323,647 Grants and academic support payable, current portion 22,602 28,869 Accrued expenses and other current liabilities 572,764 132,905 Due to third-party payors 655,892 598,020 Current accrued liabilities under self-insurance programs 137,537 116,161 Current maturities of long-term debt 25,471 20,735 Long-term debt subject to short-term remarketing 58,880 73,836 Short-term debt 77,697 77,697 Total current liabilities 2,159,963 1,636,766 Long-term debt, less current maturities 1,611,861 1,636,857 Accrued liabilities under self-insurance programs, less current portion 650,034 586,472 Grants and academic support payable, less current portion 71,871 65,120 Interest rate swaps 128,253 120,755 Lease obligations, less current portion 150,514 — Other liabilities 241,814 208,114 Total liabilities 5,014,310 4,254,084 Net assets: Without donor restrictions: Controlling interest 8,615,138 7,819,189 Noncontrolling interest in subsidiaries 515 635 Total net assets without donor restrictions 8,615,653 7,819,824 With donor restrictions 474,665 454,223 Total net assets 9,090,318 8,274,047 Total liabilities and net assets $ 14,104,628 $ 12,528,131 See accompanying notes to the consolidated financial statements. 4 Northwestern Memorial HealthCare and Subsidiaries Consolidated Statements of Operations and Changes in Net Assets (In thousands) Year Ended August 31 2020 2019 Revenue Patient service revenue $ 5,570,737 $ 5,665,736 Rental and other revenue 394,664 355,335 Net assets released from donor restrictions and federal and state grants 323,026 30,957 Total revenue 6,288,427 6,052,028 Expenses Salaries 2,578,215 2,411,575 Employee benefits 346,970 350,024 Supplies 1,303,575 1,230,830 Purchased services 665,600 667,198 Depreciation and amortization 370,991 372,310 Insurance 132,781 122,764 Rent and utilities 105,013 105,078 Repairs and maintenance 123,882 131,256 Interest 53,346 60,634 Illinois Hospital Assessment 157,279 154,117 Other 157,775 162,713 Total expenses 5,995,427 5,768,499 Operating income 293,000 283,529 Nonoperating gains (losses) Investment return 576,905 57,836 Contribution of Centegra net assets — 74,555 Change in fair value of interest rate swaps (7,498) (47,405) Grants and academic support provided (74,567) (46,904) Other 26,576 26,133 Total nonoperating gains, net 521,416 64,215 Excess of revenue over expenses 814,416 347,744 Net gain attributable to noncontrolling interest in subsidiaries 455 1,193 Excess of revenue over expenses attributable to NMHC and subsidiaries $ 813,961 $ 346,551 5 Northwestern Memorial HealthCare and Subsidiaries Consolidated Statements of Operations and Changes in Net Assets (continued) (In thousands) Year Ended August 31, 2020 2019 Net assets without donor restrictions, controlling interest Excess of revenue over expenses $ 813,961 $ 346,551 Net assets released from restrictions used for property and equipment additions 5,514 12,567 Postretirement-benefit-related changes other than net periodic pension cost (18,890) (146,907) Other (4,636) (317) Increase in net assets without donor restrictions, controlling interest 795,949 211,894 Net assets without donor restrictions, noncontrolling interest Excess of revenue over expenses 455 1,193 Distribution to noncontrolling interest (903) (1,118) Other 328 (66) (Decrease) increase in net assets without donor restrictions, noncontrolling interest (120) 9 Net assets with donor restrictions Contributions 47,190 57,321 Investment return 21,732 16,400 Net assets released from restrictions used for: Operating expenses, charity care, and research and education (42,867) (36,142) Property and equipment additions (5,514) (12,567) Change in fair value of split-interest agreements 367 (245) Contribution of Centegra net assets with donor restrictions — 6,591 Other (466) (2,363) Increase in net assets with donor restrictions 20,442 28,995 Change in net assets 816,271 240,898 Net assets, beginning of period 8,274,047 8,033,149 Net assets, end of period $ 9,090,318 $ 8,274,047 See accompanying notes to the consolidated financial statements. 6 Northwestern Memorial HealthCare and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Year Ended August 31, 2020 2019 Operating activities Change in net assets $ 816,271 $ 240,898 Adjustments to reconcile change in net assets to net cash provided by operating activities: Postretirement benefit-related changes other than net periodic pension cost 18,890 146,907 Change in fair value of interest rate swaps 7,498 47,405 Net unrestricted realized investment return and net change in unrestricted and restricted unrealized investment gains/ losses (577,626) (58,821) Restricted contributions, change in fair value of split interest agreements and realized investment return (68,567) (72,489) Contribution of Centegra net assets — (81,146) Depreciation and amortization 370,991 372,310 Changes in operating assets and liabilities: Patient accounts receivable 184,260 44,127 Due to