CFO FINANCIAL UPDATE

Financial Narrative

For the Month Ended May 31, 2019

BALANCE SHEET:

We had strong Cash Collections of $5.2MM for May 2019 increasing our cash balance by $332K.  Our Net AR decreased by $322K.  Our Payor mix saw a huge increase in Medicare utilization and less in HMO/PPO and Commercial plans.  Medicare Net to Gross percentages average approximately 49.1% and HMO/PPO average closer to 72%.  Having strong Medicare volumes will assist us in our Cost report for 2019, but we will calculate an estimated interim rate until August 2019, based on 5 months of data.  Our actual Bad Debt expense was $222K for May and $698k YTD.

Inventories decrease by $199k as a result of supply chain efforts in using our existing inventory as opposed to ordering more when we have on the shelves.   We conducted a physical inventory count of supplies in April and we will post those totals in May 2019.  Most of our departments had decreases in the physical counts.

Assets are being Depreciated according to useful lives in accordance with AHA depreciation guidelines.

LIABILITIES:

Accrued Payroll liabilities increased by $318k due to payroll timing issues in the month.  Days in AP are 39.

CURRENT EARNINGS:

Revenue over Expense for May 2019 was $98K and YTD is $1.175MM.  EBIDA for April 2019 was $634K and YTD EBIDA grew to $3.71MM.

INCOME STATEMENT:

Total Gross Patient Revenue was in excess of budget by $366K.  Net patient revenue was in excess of budget by $757K.  Hospital volumes for May 2019 remain strong. Our actual Bad Debt expense was $222K for May and $698k YTD.  YTD Bad Debt as a percent of Net Revenue is 2.82%.

Supplies are up by $424k due to large increases in patient volumes as well as our 340B program which was started in Fall 2018. For supplies, we had an inventory adjustment of $189k and 2017 340B RX expense of $72K as we were able to utilize inventory instead of making additional purchases and burning cash.  State provider fees increased $25k based on the schedule received from Colorado Medicaid.  Repairs and Maintenance costs were over budget by $116k due to repairs of RTU 1,2 & 3.

Interest Expense and Depreciation were budget misses.