Financial Performance Ratios -

Review the financial statements of the organization and answer the following questions:

• What is the operating margin for the company in the two comparative years? Has it improved or worsened?
• What is the operating margin as a percent of net revenues for each year? How does it compare to Moodys 2019 Healthcare Median of 2.2%?
• What are the days cash on hand for the two years? How does that compare to Moodys 2019 Healthcare Median of 203.5?
• What is the excess margin as a percent of net revenues for each year? How does it compare to Moodys 2019 Healthcare Median of 4.6%?
• What is the current ratio for the two years? How does it compare to Moodys 2019 Median of 1.9?

Operating Indicators

List three operating indicators/statistics for the two years and explain if the trend is favorable or unfavorable

Payor Mix

Review the organization's payor mix. What are the two largest payors? What does this tell you about the organization?

Financial Assessment

Based on the information above, is Sanford a profitable organization? Is it trending in the right direction?

Recommendations

Provide at least two recommendations that would improve Sanfords financial position.

SANFORD CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018 (In thousands) ASSETS CURRENT ASSETS Cash Short-term investments Accounts receivable, less allowances Inventories Other current assets Total current assets INVESTMENTS ASSETS WHOSE USE IS LIMITED PROPERTY AND EQUIPMENT NET OTHER ASSETS Right of use asset Investment in joint ventures Non-operating property Goodwill and intangible assets Notes receivable Other assets Total other assets TOTAL ASSETS TOTAL ASSETS See notes to consolidated financial statements. SANFORD CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) NET ASSETS WITHOUT DONOR RESTRICTIONS - CONTROLLING INTEREST Excess of revenues over expenses attributable to controlling interest Net assets released from restrictions for acquisition of property and equipment Pension plan related changes INCREASE IN NET ASSETS WITHOUT DONOR RESTRICTIONS - CONTROLLING INTEREST NET ASSETS WITHOUT DONOR RESTRICTIONS - NON-CONTROLLING INTEREST Deficiency of revenues over expenses Contributions from non-controlling interests Contributions from business combination INCREASE IN NET ASSETS WITHOUT DONOR RESTRICTIONS - NON-CONTROLLING INTEREST NET ASSETS WITH DONOR RESTRICTIONS Contributions Investment return (loss) and other Contributions from business combination Net assets released from restrictions INCREASE IN NET ASSETS WITH DONOR RESTRICTIONS INCREASE IN NET ASSETS NET ASSETS - BEGINNING OF YEAR NET ASSETS END OF YEAR See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) INCREASE (DECREASE) IN CASH AND CASH EQUTVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS END OF YEAR SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property and equipment funded through accounts payable Property and equipment funded through long-term debt Right of use asset financed by operating lease liabilities In-kind contributions received SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest RECONCILLATION OF CASH AND CASH EQUTVALENTS Cash Cash equivalents included in other current assets Cash equivalents included in assets whose use is limited (Concluded) See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) OPERATING REVENUES Net patient revenue Net resident revenue Premium revenue Other operating revenue Total operating revenues OPERATING EXPENSES Salaries and benefits Supplies Purchased services and other Medical claims Depreciation and amortization Interest Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME (EXPENSE) Investment return (loss) Contributions from business combination Loss on extinguishment of debt Other expenses Net non-operating income (expense) EXCESS OF REVENUES OVER EXPENSES Plus deficiency of revenues over expenses attributable to non-controlling interest EXCESS OF REVENUES OVER EXPENSES ATTRIBUTABLE TO CONTROLLING INTEREST 155,181 172,909 See notes to consolidated financial statements. SANFORD CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018 (In thousands) LIABILITIES AND NET ASSETS CURRENT LIABILITIES Current maturities of long-term debt Current portion of other liabilities Accounts payable Accrued compensation and benefits Medical claims payable Other accruals Total current liabilities OTHER LIABILITIES Operating leases Deferred compensation Defined benefit pension Residential housing deposits Other non-current liabilities Total other liabilities LONG-TERM DEBT, LESS CURRENT MATURITIES Total liabilities COMMITMENTS AND CONTINGENCIES (NOTE 15) NET ASSETS Without donor restrictions - controlling interest Without donor restrictions - non-controlling interest With donor restrictions Total net assets TOTAL LIABILITIES AND NET ASSETS See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets Adjustments to reconcile increase in net assets to net cash provided by operating activities Net realized and unrealized market (gain) loss on investments Depreciation and amortization Loss (gain) on sale or property and equipment Pension plan related changes Loss on extinguishment of debt Contributions from business combination Contributions into non-controlling interest Contributions restricted for long-lived purposes Other changes in net assets Changes in other operating elements Accounts receivable and other assets Accounts payable and other current liabilities Deferred compensation liability Other liabilities Cash flows from operating activities CASH FLOWS USED IN INVESTING ACTIVITIES Cash and cash equivalents acquired through business combination Acquisition of property and equipment Proceeds from sale of property and equipment Purchases of investments and deferred compensation assets Proceeds from sale of investments and deferred compensation assets Increase in other assets Cash flows used in investing activities CASH FLOWS USED IN FINANCING ACTIVITIES Proceeds from issuance of short-term bridge loan Repayment of short-term bridge loan Proceeds from issuance of long-term debt related to extinguishment Bond premiums related to extinguishment Extinguishment of long-term debt Advance refunding escrows Repayment of long-term debt Net decrease of bond discounts, premiums and deferred financing costs Proceeds from residential housing deposits and annuities issued Refunds of residential housing deposits Contributions into non-controlling interest Proceeds from contributions restricted for long-lived purposes Cash flows used in financing activities $ 94,966 S (18,865) SANFORD CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018 (In thousands) ASSETS CURRENT ASSETS Cash Short-term investments Accounts receivable, less allowances Inventories Other current assets Total current assets INVESTMENTS ASSETS WHOSE USE IS LIMITED PROPERTY AND EQUIPMENT NET OTHER ASSETS Right of use asset Investment in joint ventures Non-operating property Goodwill and intangible assets Notes receivable Other assets Total other assets TOTAL ASSETS TOTAL ASSETS See notes to consolidated financial statements. SANFORD CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) NET ASSETS WITHOUT DONOR RESTRICTIONS - CONTROLLING INTEREST Excess of revenues over expenses attributable to controlling interest Net assets released from restrictions for acquisition of property and equipment Pension plan related changes INCREASE IN NET ASSETS WITHOUT DONOR RESTRICTIONS - CONTROLLING INTEREST NET ASSETS WITHOUT DONOR RESTRICTIONS - NON-CONTROLLING INTEREST Deficiency of revenues over expenses Contributions from non-controlling interests Contributions from business combination INCREASE IN NET ASSETS WITHOUT DONOR RESTRICTIONS - NON-CONTROLLING INTEREST NET ASSETS WITH DONOR RESTRICTIONS Contributions Investment return (loss) and other Contributions from business combination Net assets released from restrictions INCREASE IN NET ASSETS WITH DONOR RESTRICTIONS INCREASE IN NET ASSETS NET ASSETS - BEGINNING OF YEAR NET ASSETS END OF YEAR See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) INCREASE (DECREASE) IN CASH AND CASH EQUTVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS END OF YEAR SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property and equipment funded through accounts payable Property and equipment funded through long-term debt Right of use asset financed by operating lease liabilities In-kind contributions received SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest RECONCILLATION OF CASH AND CASH EQUTVALENTS Cash Cash equivalents included in other current assets Cash equivalents included in assets whose use is limited (Concluded) See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) OPERATING REVENUES Net patient revenue Net resident revenue Premium revenue Other operating revenue Total operating revenues OPERATING EXPENSES Salaries and benefits Supplies Purchased services and other Medical claims Depreciation and amortization Interest Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME (EXPENSE) Investment return (loss) Contributions from business combination Loss on extinguishment of debt Other expenses Net non-operating income (expense) EXCESS OF REVENUES OVER EXPENSES Plus deficiency of revenues over expenses attributable to non-controlling interest EXCESS OF REVENUES OVER EXPENSES ATTRIBUTABLE TO CONTROLLING INTEREST 155,181 172,909 See notes to consolidated financial statements. SANFORD CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018 (In thousands) LIABILITIES AND NET ASSETS CURRENT LIABILITIES Current maturities of long-term debt Current portion of other liabilities Accounts payable Accrued compensation and benefits Medical claims payable Other accruals Total current liabilities OTHER LIABILITIES Operating leases Deferred compensation Defined benefit pension Residential housing deposits Other non-current liabilities Total other liabilities LONG-TERM DEBT, LESS CURRENT MATURITIES Total liabilities COMMITMENTS AND CONTINGENCIES (NOTE 15) NET ASSETS Without donor restrictions - controlling interest Without donor restrictions - non-controlling interest With donor restrictions Total net assets TOTAL LIABILITIES AND NET ASSETS See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets Adjustments to reconcile increase in net assets to net cash provided by operating activities Net realized and unrealized market (gain) loss on investments Depreciation and amortization Loss (gain) on sale or property and equipment Pension plan related changes Loss on extinguishment of debt Contributions from business combination Contributions into non-controlling interest Contributions restricted for long-lived purposes Other changes in net assets Changes in other operating elements Accounts receivable and other assets Accounts payable and other current liabilities Deferred compensation liability Other liabilities Cash flows from operating activities CASH FLOWS USED IN INVESTING ACTIVITIES Cash and cash equivalents acquired through business combination Acquisition of property and equipment Proceeds from sale of property and equipment Purchases of investments and deferred compensation assets Proceeds from sale of investments and deferred compensation assets Increase in other assets Cash flows used in investing activities CASH FLOWS USED IN FINANCING ACTIVITIES Proceeds from issuance of short-term bridge loan Repayment of short-term bridge loan Proceeds from issuance of long-term debt related to extinguishment Bond premiums related to extinguishment Extinguishment of long-term debt Advance refunding escrows Repayment of long-term debt Net decrease of bond discounts, premiums and deferred financing costs Proceeds from residential housing deposits and annuities issued Refunds of residential housing deposits Contributions into non-controlling interest Proceeds from contributions restricted for long-lived purposes Cash flows used in financing activities $ 94,966 S (18,865)