LEADING THE QUEST FOR HEALTH®

Financial Report

Nine Months Ended March 31, 2016

www.cedars-sinai.edu

STATISTICS:

Average occupied beds for the month of March 2016 were 747 or 66 (9.7%) favorable to the budgeted amount of 681and (8.4%) favorable to last year’s 689 average occupied beds. Year-to-date average occupied beds totaled 692 or(4.8%) favorable to last year’s average occupied beds of 660. YTD average daily non admitted observation patientsdecreased to 25 patients a day from 28 patients a day in the prior year.

Average length of stay (patient days / admissions) for the month of March 2016 was 5.2 days which was the same asthe budgeted amount and last year’s amount. Year-to-date average length of stay totaled 5.1 days which wasfavorable to the budget and to last year’s 5.2 days.

Admissions for the month of March 2016 were 4,424 or 329 (8.0%) favorable to the budgeted amount of 4,095 and182 (4.3%) more than last year’s 4,242 admissions. Year-to-date admissions totaled 37,184 or (5.7%) favorable to lastyear’s admissions of 35,170.

Patient days for the month of March 2016 were 23,145 or 2,039 (9.7%) favorable to the budgeted amount of 21,106and (8.4%) favorable to last year’s 21,357 patient days. Year-to-date patient days total 190,359 which is (4.8%)favorable compared to last year’s patient days of 181,595.

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FINANCIAL REPORTNINE MONTHS ENDED MARCH 31, 2016

FYE 06/30/16

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BALANCE SHEET:

Cash and unrestricted investments (including marketable securities and board designated assets) decreased by $75 million to$1.768 billion at March 31, 2016 from $1.843 billion at June 30, 2015, driven by acquisitions, the funding of the pensionplan, and a challenging equity investment market. Medical Center’s operating activities provided $340 million in cash andunrestricted investments while investing activities used $365 million and financing activities used $50 million.

Net patient receivables increased by $37 million to $544 million at March 31, 2016 compared to $507 million at June 30,2015 as a result of increase in volume. Days in accounts receivable increased to 67.1 days at March 31, 2016 from 66.3 daysat June 30, 2015.

Prepaid expenses and other current assets totaled $156 million at March 31, 2016 which was $16 million more than the $140million balance at June 30, 2015. The increase was primarily due to increase in receivable for the California Hospital FeeProgram.

Net property, plant and equipment decreased by $38 million to $1.720 billion at March 31, 2016 compared to $1.758 billion atJune 30, 2015. This is attributed to depreciation of approximately $120 million offset by capital expenditures totaling $82million.

Other assets totaled $426 million at March 31, 2016 compared to $279 million at June 30, 2015. The increase relatesprimarily to acquisitions.

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BALANCE SHEET (CONTINUED)

Accounts payable and accrued liabilities totaled $273 million at March 31, 2016 which was $5 million more than the$268 million recognized at June 30, 2015.

Accrued payroll and related expenses totaled $257 million at March 31, 2016 which was $4 million less than the $261million seen at June 30, 2015 due to payment of incentive compensation.

Due to third-party payers was $39 million at March 31, 2016 which was $33 million more than the $6 million recognizedat June 30, 2015. Generally, the account balance in due to third-party payers is comprised of amounts payable to or duefrom the government under the Medicare program for various cost report years. These cost reports are settled severalyears after services have been provided. There have been no impacts of these prior period settlements in fiscal 2016.Thus, the fiscal 2016 changes are related to an estimation of the current year settlement requirements.

Long-term debt including current portion, at $985 million at March 31, 2016 decreased by $60 million as compared tothe $1.045 billion realized at June 30, 2015. The Medical Center refinanced its 2005 series bonds in November 2015. Thedecrease was attributed to repayment of principal of $48 million as well as write off of premium upon extinguishment ofthe 2005 series bonds. The Medical Center also incurred a gain of $6 million as result of the transaction.

Long-term accrued workers’ compensation and malpractice insurance claims totaled $121 million at March 31, 2016which was more than the $111 million at June 30, 2015. This increase was attributed to monthly scheduled accruals.

Other long term liabilities totaled $43 million at March 31, 2016 which was less than the $56 million reported at June 30,2015. This decrease was attributed to funding for the pension plan ($44 million) offset by monthly accruals for thepension liability.

Net assets have increased by $116 million to $3.424 billion at March 31, 2016 from $3.308 billion at June 30, 2015. Thischange is primarily attributed to operating results, which is partially offset by investment losses.

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STATEMENT OF OPERATIONS:

Net patient service revenue for the nine months ended March 31, 2016 totaled $2,200 million which was $24 millionfavorable to the budgeted total of $2,176 million and favorable to the $2,136 million realized in the same period lastyear. The increase in net patient service revenue is attributed to increase in volume, and partially offset by the impactof change in payer mix and the continued expansion of commercial exchanges which has resulted in a reduction ofreimbursement amount as compared to the traditional commercial plans.

Other operating revenue for the nine months ended March 31, 2016 was $176 million which equaled last year andwas $13 million favorable to the budgeted total of $163 million as a result of increase in royalty revenue.

Expenses for the nine months ended March 31, 2016 were $2,134 million compared to a budgeted total of $2,113million and $2,049 million last year. Included in expenses are salaries and related expenses totaling $1,131 millionyear to date which was $5 million less than the budgeted total of $1,136 million and $80 million more than the$1,051 million recognized last year. Supplies and other expenses for the nine months ended March 31, 2016 were$834 million compared to a budget total of $806 million and $826 million recognized last year. Professional fees forthe nine months ended March 31, 2016 were $22 compared to a budgeted total of $21 million and $21 millionrecognized last year.

Based on these results, operating income totaled $242 million for the nine months ended March 31, 2016 which was$16 million more than the budget of $226 million.

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STATEMENT OF CASH AND UNRESTRICTED INVESTMENTS FLOWS (EXCLUDING RESTRICTED FUNDS):

Cash and unrestricted investments flows provided by operations for the nine months ended March 31, 2016 totaled$340 million compared to the $296 million that had been budgeted to be provided by operations. In addition tofavorable income from operations ($16 million), favorable variances were realized for due to third party payers($33 million), accounts payable and other liabilities ($17 million) and accrued payroll and other liabilities ($4million), offset by unfavorable variances from inventories, prepaid expenses and other assets ($14 million), patientaccounts receivable ($10 million) and amortization expenses ($2 million).

Cash and unrestricted investments flows used by investing activities for the nine months ended March 31, 2016totaled $365 million, which represents an unfavorable variance of $173 million as compared to the $192 millionbudgeted to be used in investing activities. These unfavorable variance of $172 million were attributed to variancein investment losses of $131 million due to actual incurred loss of $102 million compared to an budgeted gain of$29 million, and unfavorable variance in other assets ($143 million), offset by favorable variances in expendituresfor property and equipment ($57 million) and transfers to affiliates ($44 million).

Cash and unrestricted investments flows used in financing activities for the nine months ended March 31, 2016were $50 million as compared to an expected use of $34 million in the budgeted results. The $16 million variancewas attributed to the funding for the pension plan ($44 million) offset by scheduled accrual for the pension liability,and additional principal repayment upon extinguishment of 2005 series bonds ($13 million).

The net results of the operating, investing and financing activities for the nine months ended March 31, 2016 is todecrease of the Medical Center’s net cash and unrestricted investments by $75 million, which represents anincremental $145 million use of cash as compared to the $70 million budgeted increase in cash and unrestrictedinvestments.

FINANCIAL RATIOS:

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1. The debt service coverage, return on equity and return on revenue ratios do not include net investment income.

2. Return on revenues includes bad debt as a revenue reduction before the calculation of the ratio.

March 2016

June2015

March2015

Current Ratio 4.2 4.4 4.1

Days in Patient Receivables 67.1 66.3 68.0

Days in Current Liabilities 80.7 81.5 86.7

Debt to Equity 0.29 0.32 0.32

Debt Service Coverage Ratio¹ 5.3 6.9 5.9

Return on Equity¹ 9.4% 11.5% 10.8%

Return on Revenues¹˒² 10.2% 12.3% 11.4%

AVERAGE OCCUPIED BEDSYEAR ENDED JUNE 30,

2016Actual

2016Budget Variance

2015Actual

JulyAugustSeptember

Quarter 1 OctoberNovemberDecember

Quarter 2JanuaryFebruaryMarch

Quarter 3April MayJune

Quarter 4

Y-T-D 660

2.5%3.7%3.7%3.3%7.5%8.9%4.1%6.8%5.2%7.4%9.7%7.4%

611632644629668655664662699682689690

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692 654 5.9%

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663673665667689694666683705730747727

647649641646641637640639670680681677

AVERAGE LENGTH OF STAYYEAR ENDED JUNE 30,

(Calculation = Patient Days / Admissions)

2016Actual

2016Budget Variance

2015Actual

JulyAugustSeptember

Quarter 1 OctoberNovemberDecember

Quarter 2JanuaryFebruaryMarch

Quarter 3April MayJune

Quarter 4

Y-T-D 5.2

0.10.00.10.1

(0.2)0.00.10.0

(0.0)(0.0)(0.0)(0.0)

5.05.35.25.15.25.25.15.25.35.35.25.2

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5.1 5.2 0.1

5.05.15.05.05.35.15.05.15.25.25.25.2

5.15.15.15.15.15.15.15.15.25.25.25.2

ADMISSIONSYEAR ENDED JUNE 30,

2016Actual

2016Budget Variance

2015Actual

JulyAugustSeptember

Quarter 1 OctoberNovemberDecember

Quarter 2JanuaryFebruaryMarch

Quarter 3April MayJune

Quarter 4

Y-T-D 35,170

5.3%5.2%6.5%5.7%4.7%9.3%7.9%7.3%5.1%5.9%8.0%6.4%

3,828 3,7263,713

11,2673,9763,7594,053

11,7884,1123,7614,242

12,115

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37,184 34,936 6.4%

4,103 4,1173,982

12,2024,0484,0614,161

12,2704,2354,0534,424

12,712

3,8973,9123,738

11,5473,8673,7143,857

11,4384,0303,8264,095

11,951

PATIENT DAYSYEAR ENDED JUNE 30,

2016Actual

2016Budget Variance

2015Actual

JulyAugustSeptember

Quarter 1 OctoberNovemberDecember

Quarter 2JanuaryFebruaryMarch

Quarter 3April MayJune

Quarter 4

Y-T-D 181,595

2.5%3.7%3.7%3.3%7.5%9.0%4.1%6.8%5.3%7.3%9.7%7.5%

18,94019,59019,32457,85420,71119,65120,57860,94021,66519,77921,35762,801

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190,359 179,792 5.9%

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20,54320,85919,94261,34421,37220,81220,65162,83521,86521,17023,14566,180

20,04220,12419,22959,39519,88219,09819,83158,81120,75619,72421,10661,586

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Patient Revenue-Inpatient - Routine Care-Inpatient - Ancillary Services-Outpatient

Total Patient RevenueDeductionsNet Patient RevenueOther Operating RevenueTotal RevenueExpensesIncome from Operations

2016Actual

2016Budget

Nine Months Ended March 31,(In millions)

2015Actual

$ 1,9114,2613,2829,4547,3182,136

1762,3122,049

$ 263

2014Actual

$ 2,0154,4613,4449,9207,7442,176

1632,3392,113

$ 226

$ 1,7033,864 3,0628,6296,7001,929

1292,0581,852

$ 206

$ 2,112 4,8213,662

10,5958,3952,200

1762,3762,134

$ 242

Statement of Revenue & Expenses

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