financial documents from Stanford medical center- public report from 2018. Stanford Health Care Consolidated Statements of Cash Flows Years Ended August 31, 2019 and 2018 (in thousands of dollars)

2019 2018

Cash flows from operating activities: Change in Stanford Health Care net assets 253,280$459,949 $Change in noncontrolling interests 8,184(3,333)Total change in net assets 261,464456,616Adjustments to reconcile change in net assets tonet cash provided by operating activities: Loss on extinguishment of debt -47,613Depreciation and amortization 188,878174,665Provision for doubtful accounts -57,437Change in fair value of interest rate swaps 134,269(63,439)Increase in value of University managed pools (76,748)(110,984)Unrealized gains on investments (23,391)(10,700)Excess of income on equity method investees over distributions received (6,241)(2,047)Contributions received for long lived assets or endowment (45,967)(37,958)Net equity transfers to/from related parties 120,40693,938Premiums received from bond issuance -76,138Changes in operating assets and liabilities: Patient accounts receivable (62,348)(69,780)Due to related parties (8,388)4,274Other receivables, inventory, other assets, prepaid expenses and other (48,251)1,108Accounts payable, accrued liabilities and pension liabilities 107,40789,663Accrued salaries and related benefits 65,609(46,269)Third-party payor settlements (4,556)16,325Self-insurance reserves 38,69018,104Cash provided by operating activities 640,833694,704Cash flows from investing activities: Purchases of investments (580,481)(593,592)Sales of investments 446,57947,143Purchases of investments at equity (11,244)(10,843)Purchases of investments in University managed pools (2,850)(1,524)Sales of investments in University managed pools 2,586119Swap settlement payments, net (12,595)(15,393)(Increase) decrease in assets limited as to use and other (11)58,134Purchases of property and equipment (553,642)(474,735)Cash used in investing activities (711,658)(990,691)Cash flows from financing activities: Proceeds from issuance of debt -954,200Repayment on revolver -(135,000)Costs of issuance of debt (98)(6,783)Payment of long-term debt and capital lease obligations (14,610)(544,331)Contributions received for long lived assets or endowment 45,95240,747Net equity transfers to/from related parties (107,166)(70,699)Cash (used in) provided by financing activities (75,922)238,134Net decrease in cash and cash equivalents (146,747)(57,853)Cash and cash equivalents, beginning of year 652,256710,109Cash and cash equivalents, end of year 505,509$652,256 $Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized 43,602$33,033 $Supplemental disclosures of non cash information: Increase in payables for property and equipment 48,461$111,562 $Equity transfers to related parties, net (47,096)(28,563)Assets and liabilities acquired under capital leases -479

Appendix B

Stanford Financial Statement - 2

Balance Sheet

20182019

Assets Current assets: Cash and cash equivalents 505,509 $652,256 $Assets limited as to use, held by trustee 11Short term investments 399,639391,314

685,425623,077Other receivables 93,52979,036Inventories 69,83158,884Prepaid expenses and other 84,52452,886Total current assets 1,838,4681,857,453 Investments 657,554509,781Investments at equity 97,96380,989Investments in University managed pools 1,478,5541,400,839Property and equipment, net 3,691,0153,279,048Other assets 78,36086,739Total assets 7,841,914 $7,214,849 $

Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities 557,284 $449,192 $Accrued salaries and related benefits 275,099209,490Due to related parties 103,77998,942Third-party payor settlements 29,91834,474Current portion of long-term debt 114,23514,505Debt subject to remarketing arrangements 228,200228,200Self-insurance reserves and other 59,42454,933Total current liabilities 1,367,9391,089,736 Self-insurance reserves and other, net of current portion 174,040139,841Swap liabilities 316,796182,527Other long-term liabilities 150,464122,944Pension liability 17,0486,650Long-term debt, net of current portion 1,592,9791,711,967Total liabilities 3,619,2663,253,665 Net assets: Without donor restrictions: Stanford Health Care 3,518,9643,285,398Noncontrolling interests 26,91118,727Total without donor restrictions 3,545,8753,304,125With donor restrictions 676,773657,059Total net assets 4,222,6483,961,184 Total liabilities and net assets 7,841,914 $7,214,849

Appendix C

Financial Statement - 3

Stanford Health Care Consolidated Statements of Operations and Changes in Net Assets Years Ended August 31, 2019 and 2018 (in thousands of dollars)

The accompanying notes are an integral part of these consolidated financial statements.

3 2019 20184,735,366$(57,437)

Net patient service revenue 5,113,052 $4,677,929 Premium revenue 106,13092,654157,757135,59713,0634,3665,390,0024,910,546

2,302,3992,091,26041,30046,146727,136667,3791,350,7081,216,992190,283176,74242,43135,434483,258477,661(130,800)(121,727)5,006,7154,589,887 Income from operations 383,287320,659 Interest and investment income 42,90431,122Earnings on equity method investments 8,3157,048Increase in value of University managed pools 76,748110,984Swap interest and change in value of swap agreements (146,794)48,043Loss on extinguishment of debt(47,613)

364,460470,243 Other changes in net assets without donor restrictions: Transfer to Stanford University (120,090)(98,183)Transfer from Lucile Salter Packard Children's Hospital2,068

Change in net unrealized gains on investments 22,8259,438

Net assets released from restrictions used for: 977309Change in pension and postretirement liability (26,422)28,277Noncontrolling capital distribution(1,200)

241,750 410,952 Transfer (to) from Stanford University (316) 2,177

Contributions and other 31,07944,983

8157122,1762,467(13,063)(4,366)(977) (309) 19,714 45,664 261,464 456,616 3,961,184 3,504,5684,222,648$3,961,184

Calculate and interpret key financial ratios:

• Liquidity (current ratio, collection period, days cash-on-hand, average payment period)
• Profitability (operating margin (%), total margin (%), return on net assets (%)
• Asset efficiency (total asset efficiency, age of plant (years), fixed asset turnover, current asset turnover, inventory turnover)
• Capital structure (net asset financing [%], long-term debt to capitalization, debt service coverage, cash flow to debt [%])
• Provide comparisons to industry averages or to a competitor and provide comments
• Provide recommendations to improve financial