2019 Financing Investor Presentation Michael J. Dowling President - - PowerPoint PPT Presentation

2019 Financing Investor Presentation

Michael J. Dowling

President & CEO

Mark J. Solazzo

Executive Vice President & Chief Operating Officer Michele L. Cusack Senior Vice President & Chief Financial Officer

September 13, 2019

The Investor Presentation you are about to view is provided as of September 13, 2019, for a proposed offering of Dormitory Authority of the State of New York, Northwell Health Obligated Group, Series 2019A&B Tax-Exempt Bonds, and Northwell Health, Series 2019A Taxable Bonds (the “Bonds”). Market prices, financial data, and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. This Investor Presentation is provided for your information and convenience only. By receiving this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, or to produce, publish or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute an offer to sell or the solicitation of an offer to buy any security or other financial instrument, including the Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made solely by means of the Preliminary Official Statement, Official Statement, Preliminary Offering Memorandum or Offering Memorandum, which describe the actual terms of such Bonds. The underwriters make no representations as to the legal, tax, credit or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any

• ther parties to such transactions and their respective affiliates. In no event shall the underwriters or the Issuer be liable for any use by any

party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. Nothing in these materials constitutes a commitment by the underwriters or any of their affiliates to enter into any

• transaction. No assurance can be given that any transaction mentioned herein could in fact be executed.

Any investment decision regarding the Bonds should only be made after a careful review of the complete Preliminary Official Statement or Preliminary Offering Memorandum. You will be responsible for consulting with your own advisors and making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the Issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. Past performance is not indicative of future returns, which will vary. This Investor Presentation may contain “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking statements. We caution you not to place undue reliance on these

• statements. All statements other than the statements of historical fact could be deemed forward-looking. All opinions, estimates, projections,

forecasts and valuations are preliminary, indicative and are subject to change without notice. Prospective investors should contact their salesperson at, and execute transactions through an underwriter for the Bonds qualified in their home jurisdiction unless governing law permits otherwise.

Disclaimer

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• Large scale, covering broad geographic area – more than 8 million people
• Stable financial profile
• #1 in market, with continued market share gains
• 29.9% inpatient market share, more than 2x that of any other provider in

the greater metro NY area

• Largest market share growth in last 6 years compared to top 5 systems in

service area

• Demonstrated track-record of successful integration of acquired hospitals,

physician practices, and other assets

• Experienced, stable management team
• Centralized governance & strategic decision-making

Investment Highlights

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The Northwell Perspective

• A proud history of achievement; innovation and growth.

− Consistency of strategy and purpose − Stability of performance

• A recognition of how much has changed.

− Role of the hospital − Creation of a distributed network − New programs; new business

• A progressive culture.

− Collaborative and team-based − Optimistic, integrated and adaptive

• An understanding of the responsibility and obligation of

leadership. − An agent of continuous change and practical disruption − Responsibility to the community at large

• A commitment to the promotion and advancement of
• verall health.

− More than the delivery of excellent medical care − Long-term view; multi-year perspective

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Key Facts

…The largest integrated

health system in New York State

$11.6

billion

• perating

revenue

1,800 4,300+

employed physicians

12,600+

affiliated physicians nearly 70,000 employees residents and fellows in 120 programs

29.9%

inpatient share

• f market

19

hospitals

750+

ambulatory facilities

4,000

researchers

2,500

clinical research studies conducted

1,800

residents and fellows in 120 programs

5.5 million

patient encounters

5

Northwell Health Major Components

6

We Have Been Busy This Past Year

7

Current Operations Growth Diversification

Key Focus Areas

8

53 120 227 280 339 402 436 469 506 571 612 660

• 100

200 300 400 500 600 700 800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Current Operations – Enhanced Effectiveness

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Cumulative Beds Created Through Efficiency

Current Operations – Enhancing Our P&L: Revenue & Expense Focus

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Growth – 19 Hospitals and 750+ Ambulatory Locations

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Hospitals & Post Acute Services

Ambulatory Surgery Centers………………………………………… Urgent Care Centers………………………………………………….. Ambulatory Practices…………………………………………... Employed Physicians………………………………………. Voluntary Premium IPA…………………………….. Credentialed Voluntary Physicians……….

The referral funnel has caused many of our Hospitals to be at or above full capacity

750+(2) Ambulatory Locations

13,600 2,446 4,380 636 52 15(1)

Growth – Ambulatory Network Referral Funnel

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(1) Includes majority and minority-owned joint ventures as well as hospital-based ASCs. (2) Total also includes non-physician practice ambulatory locations, such as imaging centers.

$1.0B $1.7B $1.7B $2.5B $2.6B $2.8B $2.9B $3.1B $3.4B $3.6B $3.8B $3.9B $4.2B $4.4B $4.8B $5.5B $6.2B $6.6B $7.0B $7.4B $8.5B $9.3B $10.0B $11.6B

• $2.0B

$4.0B $6.0B $8.0B $10.0B $12.0B 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Note: Excludes Health Insurance companies

Growth – Expanding Operating Revenue

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($ in Billions)

Source: SPARCS data as of 2018 YTD September based on discharges and patient origin; excludes normal newborns (DRG 795). Market includes Staten Island, Queens, Manhattan, Nassau, Suffolk, and Westchester residents. * Includes all Northwell hospitals in both years, including Peconic Bay, which joined Northwell on January 1, 2018, and all competitor hospitals for both years.

Growth – Expanding Market Share

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Diversification – Shifting to Ambulatory

Note: Excludes Health Insurance companies

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• An interdisciplinary team

from across the enterprise

• Interconnecting our backend

systems to provide a digitally- powered, patient-centric experience

Growth – Telehealth Initiatives

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Telehealth Services enable the highest quality of specialist care in both inpatient and outpatient settings

Leveraging investments & partnership expertise to enter new markets and expand clinical capabilities

Diversification – Clinical Joint Ventures

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7 centers operational 7-10 more within the next 2 years(1) 150,000 treatments annually 52 Urgent Care Centers 13 Joint Venture Surgery Centers Additional centers in Development(1)

(1) Subject to receipt of regulatory approvals.

Diversification – Expanding Opportunities

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Moving to For-Profit

Results – 2018 & 2017 Performance

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($ in Thousands)

Operating revenue: 2018 2017 Amt % Net patient service revenue 10,616,983 $ 9,255,313 $ 1,361,670 $ 14.7% Other revenue 890,020 714,457 175,563 24.6% Total operating revenue 11,507,003 9,969,770 1,537,233 15.4% Operating expenses: Salaries 5,851,950 5,212,002 639,948 12.3% Employee benefits 1,347,618 1,230,621 116,997 9.5% Supplies & expense 3,530,160 2,841,508 688,652 24.2% Depreciation and amortization 474,509 431,497 43,012 10.0% Interest 146,660 129,509 17,151 13.2% Total operating expense 11,350,897 9,845,137 1,505,760 15.3% 156,106 124,633 31,473 25.3% Health Insurance Companies excess of operating expenses (21,711) (143,370) 121,659 84.9% 134,395 (18,737) 153,132 817.3% Non-operating gains and losses (111,501) 312,982 (424,483)

• 135.6%

Excess of revenue and gains and losses over expenses 22,894 $ 294,245 $ (271,351) $

• 92.2%

Year Ended December 31 Change Excess of operating revenue over operating expenses excluding Health insurance Companies Total excess (deficiency) of operating revenue over operating expenses

• Operating income and operating margin of $134.4 million and 1.2%,

respectively.

• Three significant non-recurring transactions included in 2018 resulted in a

decrease to total operating income of $12.8 million: $104 million of other operating revenue was recognized from the proceeds received from the Medical Liability Mutual Insurance Company (“MLMIC”) demutualization transaction $78 million in expense was recorded relating to the amended agreement with Optum360, LLC $39 million reserve was recorded within the Health Insurance Companies related to updated expectations of regulatory relief from NYS related to the ACA risk adjustment program. New York State Department of Financial Services (“DFS”) recently announced revised guidance related to the relief regulation and the remaining relief balance was fully reserved due to the uncertainty caused by a lawsuit filed by a large health insurance company contesting the regulatory relief

Results – 2018 Highlights

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Results – June 2019 & 2018 Performance

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($ in Thousands)

Operating revenue: 2019 2018 Amt % Net patient service revenue 5,617,965 $ 5,165,555 $ 452,410 $ 8.8% Other revenue 438,303 398,800 39,503 9.9% Total operating revenue 6,056,268 5,564,355 491,913 8.8% Operating expenses: Salaries 3,111,744 2,845,516 266,228 9.4% Employee benefits 729,847 684,046 45,801 6.7% Supplies & expense 1,817,638 1,663,657 153,981 9.3% Depreciation and amortization 256,150 246,617 9,533 3.9% Interest 71,017 71,656 (639)

• 0.9%

Total operating expense 5,986,396 5,511,492 474,904 8.6% 69,872 52,863 17,009 32.2% Health Insurance Companies excess of operating expenses

• 0.0%

69,872 52,863 17,009 32.2% Non-operating gains and losses 323,142 125,513 197,629 157.5% Excess of revenue and gains and losses over expenses 393,014 $ 178,376 $ 214,638 $ 120.3% Six Months Ended June 30 Change Excess of operating revenue over operating expenses excluding Health insurance Companies Total excess (deficiency) of operating revenue over operating expenses Unaudited

3.2% 1.3% 1.4% 1.2%

• 1.0%

2.0% 3.0% 4.0% 2016 2017 2018 2019 June YTD

Operating Margin

90.7% 86.5% 91.0% 97.8% 75% 80% 85% 90% 95% 100% 2016 2017 2018 2019 June YTD

Cash to Debt

3.4x 2.6x 3.3x 3.4x 1.0x 2.0x 3.0x 4.0x 2016 2017 2018 2019 June YTD

Debt Service Coverage

$2.7 $3.0 $3.1 $3.2 105 105 102 103

• 20

40 60 80 100 120

• $0.5

$1.0 $1.5 $2.0 $2.5 $3.0 $3.5 2016 2017 2018 2019 June YTD

Days Cash on Hand Total Unrestricted Cash and Investments ($ billions)

6.7% 5.0% 6.5% 6.6% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 2016 2017 2018 2019 June YTD

Operating Cash Flow Margin

46.9% 48.7% 48.5% 45.6%

40.0% 42.0% 44.0% 46.0% 48.0% 50.0% 2016 2017 2018 2019 June YTD

Debt to Capitalization

Unrestricted Cash & Investments and Days Cash on Hand3

Please refer to the Preliminary Offering documents for detailed figures. Amounts above may be rounded. 1: Excludes Health Insurance Companies. 2: Capitalization is defined as the sum of total outstanding debt and total net assets, excluding those related to permanent endowments.. 3: Refer to Note 4 to the Audited Consolidated Financial Statements in Appendix B-1 and Note G to the Unaudited Interim Consolidated Financial Statements in Appendix B-2 for more information.

Long-Term Debt Service Coverage

Results – Stable Performance in Period of Growth and Investment

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2 1

Tax-Exempt Fixed Rate Bonds Tax-Exempt Put Bonds Taxable (Corporate CUSIP) Fixed Rate Bonds Series 2019A Series 2019B-1 Series 2019B-2 Series 2019B-3 Series 2019A Par ($mm): $40.860 $53.240 $53.240 $53.240 $449.360 Issuer: Dormitory Authority of the State of New York Northwell Healthcare, Inc. Purpose: Current Refunding

• f Series 2009E

Bonds New Money General Corporate Purposes Mandatory Tender Date: N/A 5/1/2022 (Hard Put) 5/1/2024 (Hard Put) 5/1/2026 (Hard Put) N/A Final Maturity: 5/1/2033 5/1/2048 11/1/2049 Security: Gross Revenue Pledge Mortgages on Core Hospital Facilities1 Ratings: Moody’s: A3 (Stable Outlook) S&P: A- (Stable Outlook) Fitch: A- (Stable Outlook) Pricing: Tuesday, September 17 Closing: Thursday, September 26

*Preliminary and subject to change. 1) Certain springing provisions will be consented to in conjunction with the purchase of the bonds offered in the financing. Please refer to the offering documents for additional details.

Proposed Plan of Finance Overview*

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Please contact the following individuals with any questions: Michael Irwin Joan Marron Citi, Managing Director Morgan Stanley, Managing Director 212-723-5624 212-761-9049 michael.r.irwin@citi.com joan.marron@morganstanley.com Katherine Meyers Barbara Scudder Pritchard Citi, Director Morgan Stanley, Executive Director 212-723-5285 212-761-9082 katherine.meyers@citi.com barbara.scudder@morganstanley.com POS Link: https://www.munios.com/munios-notice.aspx?i=Q76KHf4dvMS4 POM Link: https://www.munios.com/munios-notice.aspx?e=JPCIE

Contact Information

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