Southeast, Inc.

Financial Report

For the Month and Period ended June 30, 2020

Board Meeting held July 20, 2020

Statement of Revenue and Expenditures

Net loss for the current month of $831,848 brings us to a Net Income YTD of $1,988,197. Operating Loss (Net

Income less Investment income, interest income, rent, other income and gain/loss on disposals) came to

$1,088,633 for the month, which brings us to an Operating Income YTD of $464,131.

Investments recovered some more during June (176,405) and the trend appears to be gradually returning to

previous values, but the outlook remains to be outside of a year to 18 months before the total value returns

from before the drop off. YTD investment income is a modest 306,928, well below our pace from before the

drop off. The anticipated decreases in June never materialized and we actually ended in an increase in

investments for the month.

Revenue received a sizeable downward adjustment as discussed in prior months of a total of $3,148,179.39.

Roughly 2.4M of this is downward adjustments to ADAMH Franklin County, Delaware & Morrow MHRSB and the

MHRSB of Belmont, Harrison and Monroe Counties. The remainder of the adjustments were to Medicaid and

Managed Medicaid. Due to the ongoing evaluation of the Managed Medicaid payments, billings and denials, we

were not able to recommend further adjustments at this time as the payment rates are still too uncertain.

Balance Sheet & Statement of Cash Flows

Reiteration: Cash took a leap forward in May as we received the PPP loan on 5/7/2020. There is a

corresponding increase in liabilities to compensate for this, so the net impact is all on the balance sheet right

now. While this loan is forgivable, there are criteria that we must meet in order to ensure it is fully forgiven, so

it will remain in the liability section until we have met those criteria where we will then record the revenue on

the Statement of Revenue and Expenditures. Due to the passing of the recent HEROES act, the period of

forgiveness for calculation purposes has been extended from 8 weeks to 24 weeks. This provides some more

strategic flexibility in ensuring maximum forgiveness.

Accounts payable decreased again in June as we continue to pay down normal bills.

Risks & Opportunities

Southeast has several risks at this point, but they also present themselves as opportunities if we approach them

in the right way.

o The billing department’s slow evolution into a real billing department is a tremendous risk, but given the

possibilities, it is also a great opportunity. Time is our biggest enemy here. From original bill to

adjudication to denial appeal, the only constant is that time continues to move forward. As we have

worked to make corrections, we have reported that we have found issues and that there is significant

impact available to the organization. Even though we have found those issues, that doesn’t necessarily

mean we’ll be able to collect everything. Furthermore, the more we dig into the processes, setups and

rules with each payer, the more we find corrections that need made. This is going to continue for a

while, but we have already seen tangible improvements in various provider/payer/location

combinations.

o Payer relationships and compliance are next. From credentialing to contract compliance, we have to be

on top of that every step of the way. We have not been able to do that yet as we have had staffing

setbacks and it has taken considerable time to get to the point that we could argue with data. We are

just now getting to the point where we can make a case that we are billing correctly and regularly.

FY19 YTD ACT vs. BUD % VAR OF

REVENUE BUDGET June YTD LAST YEAR YTD BUDGET $ VARIANCE BUDGET

ADAMH FUNDING

ADAMH-FFS 10,008,884$ (1,143,016)$ 7,266,951$ 9,985,964$ 9,174,810$ ($1,907,859) (20.8%)

ADAMH - BLOCK GRANT 2,792,037 580,886 4,060,352 2,688,679 2,559,367 1,500,985 58.6%

ADAMH PHARMACY 15,811 1,242 13,306 15,190 14,493 (1,187) (8.2%)

ADAMH - OTHER - - - - - -

TOTAL 12,816,731 (560,888) 11,340,609 12,689,833 11,748,670 (408,061) (3.5%)

FIRST & THIRD PARTY

CLIENT FEES 168,965 (11,767) 101,747 164,951 154,885 (53,138) (34.3%)

INSURANCE 305,293 122,732 883,601 446,489 279,852 603,749 215.7%

MEDICARE 225,204 145,081 1,410,253 284,760 206,437 1,203,816 583.1%

MEDICAID 10,975,934 1,055,695 11,851,700 10,612,867 10,061,273 1,790,427 17.8%

CONTRACTS 6,608,270 759,830 7,188,819 6,593,573 6,057,581 1,131,238 18.7%

IN KIND REVENUE 446,949 - - 446,949 - 0 #DIV/0!

TOTAL THIRD PARTY 18,730,615 2,071,571 21,436,120 18,549,589 16,760,027 4,676,093 27.9%

PHARMACY SALES 13,066,831 1,397,962 15,900,362 12,444,601 11,977,928 3,922,434 32.7%

PHARMACY COG (8,121,340) (636,624) (8,213,150) (7,734,609) (7,444,562) 768,588 (10.3%)

OPERATING REVENUE 36,492,836$ 2,272,021$ 40,463,941$ 35,949,414$ 33,042,064$ 7,421,877$ 22.5%

EXPENSES

SALARIES 22,010,162 2,046,636 23,899,985 21,265,857 20,175,982 3,724,003 18.5%

EMPLOYEE BENEFITS 5,655,937 492,584 5,843,118 5,386,607 5,184,609 658,509 12.7%

CONTRACT SERVICES 1,313,917 65,681 1,482,373 1,380,090 1,204,424 277,949 23.1%

COMPUTER EXPENSE 443,080 33,910 470,234 443,411 406,157 64,077 15.8%

OPERATING SUPPLIES 328,768 116,291 414,813 321,217 301,370 113,443 37.6%

OPERATING EXPENSES 837,222 77,558 838,605 874,265 767,453 71,152 9.3%

OFFICE EXPENSES 1,467,983 81,128 1,706,751 1,538,232 1,345,651 361,100 26.8%

MOBILE PHONES 257,854 19,469 326,710 284,365 236,366 90,344 38.2%

TRAVEL/TRANSPORTATION 650,199 86,143 652,453 699,343 596,016 56,437 9.5%

BUILDING & GROUNDS 2,083,399 190,861 2,243,034 2,268,423 1,909,782 333,252 17.4%

DEPRECIATION 734,263 76,625 955,873 791,367 673,074 282,799 42.0%

AUDIT & LEGAL FEES 129,872 12,119 109,514 141,637 119,049 (9,535) (8.0%)

INSURANCE EXPENSE 747,119 60,760 733,325 679,199 684,859 48,466 7.1%

IN KIND EXPENSE 446,949 - - 446,949 - 0

OTHER EXPENSES 163,720 889 323,022 197,089 150,077 172,945 115.2%

TOTAL EXPENSES 37,270,444$ 3,360,654$ 39,999,810$ 36,718,051$ 33,754,871$ $6,244,939 18.5%

OPERATING NET INCOME (LOSS) (777,608)$ (1,088,633)$ 464,131$ (768,637)$ (712,807)$ $1,176,938

MISCELLANEOUS REVENUE

INTEREST INCOME 77 8 121 90 71 50 71.4%

INVESTMENT 216,313 176,405 306,928 655,787 198,287 108,641

RENT 184,827 13,630 181,767 201,389 169,425 12,342 7.3%

GAIN/(LOSS) ON PURCHASE - - 14,737 - - 14,737

OTHER 542,667 66,744 1,020,512 564,362 497,445 523,067 105.2%

TOTAL MISCELLANEOUS 943,884 256,787 1,524,065 1,421,628 865,227 658,838 76.1%

SOUTHEAST NET REVENUE 166,276$ (831,848)$ 1,988,197$ 652,988$ $152,420 $1,835,777

Margin on Operating Revenue (2.1%) (47.9%) 1.1% (2.1%)

Margin on Total Revenue .4% (32.9%) 4.7% 1.7% 27/19/2020

SOUTHEAST, INC.CONSOLIDATED STATEMENT OF ACTIVITY

FOR THE PERIOD ENDED June 30, 2020

****** ACTUAL ******

CASH: LIABILITIES:

CASH IN BANK - UNRESTRICTED 7,975,644$ ACCOUNTS PAYABLE 1,304,274$

SCHOLARSHIP ACCOUNT ACCRUED EXPENSES 55,648

BUILDING MANAGEMENT 8,429 PROPERTY TAX PAYABLE (1,197)

PETTY CASH 3,195 7,987,268 TENANT DEPOSIT (11,831) 1,346,894

INVESTMENTS: ACCRUED WAGES & FRINGE BENEFITS:

SHORT TERM INVESTMENTS 1,154,831 ACCRUED VACATION 1,247,446

AMERICAN FUNDS 9,757,912 ACCRUED PAYROLL 1,525,312

RESTRICTED INVESTMENTS 280,495 11,193,238 ACCRUED RETIREMENT

ACCRUED OTHER 345,544 3,118,302

ACCOUNTS RECEIVABLE:

CLIENT & THIRD PARTY 1,938,505

MEDICAID 4,519,197 TOTAL CURRENT LIABILITIES 4,465,196 OTHER GRANTS & CONTRACTS 1,530,031

ADAMH 2,357,210 DEFERRED REVENUE 2,290,045

Franklin County 1,721,765

Delaware & Morrow Counties 364,180

Belmont,Harrison & Monroe Counties 271,265

APOTHECARE 898,335

MISCELLANEOUS 414,455 11,657,733 LONG TERM DEBT 9,100,340

OTHER CURRENT ASSETS: ADVANCES FROM THE STATE 671,943

APOTHECARE INVENTORY 1,260,063

PREPAIDS 827,152 CAPITALIZED LEASE AGREEMENT 302,602

EMPLOYEE LOAN/EPP 7,877

OTHER 8,587 2,103,679 TOTAL LIABILITIES 16,830,126

TOTAL CURRENT ASSETS 32,941,918 NET ASSETS:

FIXED ASSETS: UNRESTRICTED 22,083,978

VEHICLES 714,746 DESIGNATED 1,813,668

BUILDING, LAND & IMPROVEMENTS 14,469,404 RESTRICTED 39,112

FURNITURE & EQUIPMENT 4,185,116 SCHOLARSHIP 280,495

TENANT IMPROVEMENT 174,753 TOTAL NET ASSETS 24,217,253 subtotal 19,544,019

LESS accumulated depreciation (11,438,559)

NET FIXED ASSETS 8,105,460

TOTAL ASSETS 41,047,378$ TOTAL LIABILITIES & NET ASSETS 41,047,378$

SOUTHEAST, INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE PERIOD ENDED June 30, 2020

ASSETS LIABILITIES & NET ASSETS

7/19/2020

Year to date performance

Current Ratio (CURRENT ASSETS/CURRENT LIABILITIES) 7.4 Ability to pay current debt with current assets; 2 to 4 is standard.

Revenue over Expense Margin (YTD REVENUE/YTD EXPENSES) 1.05 Indicates revenues (net income) over expenses; Over 1.03 is excellent.

Assets to Liabilities (TOTAL ASSETS/TOTAL LIABILITIES) 2.44 Indicates debt structure of Organization; 2.0 is standard.

Debt to Net Assets (Equity) (TOTAL LIABILITIES/NET ASSETS) .69 Compares borrowed capital to invested capital; .40 is standard.

Days of Cash CASH & ST INVESTMENTS/AVE. DAY'S EXPENSES 64.7 Indicates number of days of cash SE has on hand. 90 days is good

Average Days in Receivables (REVENUE/365)AR/Revenue per day) 87.4 Indicates the number of days it takes to collect our receivables

ADAMH Key Performance Indicators ADAMH STANDARDS

SOUTHEAST RATIO EXCELLENT GOOD

INDEX

PTS

Administrative Costs to Expenses (Admin/Total expenses) 11.3% 7% - 9.99% 10% - 10.99% 3

Debt to Equity Ratio (Total Liabilities/Net Assets) .69 .40 - .49 .50 - 1.19 4

Revenue to Expenses (Total Revenue / Total Expense) 1.050 1.03 - 1.0599 1 - 1.0299 5

Current Ratio ( Current Assets/Current Liabilities) 7.4 1.80 - 2.39 1.4 - 1.79 5

Cash to Avg. Mo. Expense (Days) (Cash + ST Invest/Total Expenses) 64.7 80 - 89.99 50 - 79.99 4

Fund Balance Reserve ( Net Assets / Ave. Monthly expenses- including CGS) 6.0 6 - 6.99 4 - 5.99 5

% of Revenue from ADAMH (ADAMH Revenue/Total Revenue) 27.0% < 55.0% 70% - 55% 5

4.4

3

SOUTHEAST, INC.

RATIO ANALYSIS

FOR THE PERIOD ENDED June 30, 2020

Ratio

Current Ratio

Revenue over Expense Margin

Assets to Liabilities

Debt to Net Assets (Equity)

Days of Cash

Average Days in Receivables

Total Liabilities Current Liabilities + Long Term Liabilities Note - December 2018 Garage purchase closed @ 2.4M

Historical Ratio Dashboard

For the 13 Month Period ended June 30, 2020

CASH & ST INVESTMENTS/AVE. DAY'S EXPENSES

(REVENUE/365)AR/Revenue per day)

Ability to pay current debt with current assets; 2 to 4 is standard.

Indicates revenues (net income) over expenses; Over 1.03 is excellent.

Indicates debt structure of Organization; 2.0 is standard.

Compares borrowed capital to invested capital; .40 is standard.

Indicates number of days of cash SE has on hand. 90 days is good

Indicates the number of days it takes to collect our receivables

(TOTAL LIABILITIES/NET ASSETS)

(CURRENT ASSETS/CURRENT LIABILITIES)

(YTD REVENUE/YTD EXPENSES)

(TOTAL ASSETS/TOTAL LIABILITIES)

Formula Description

0

1

2

3

4

5

6

7

8

Current Ratio

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Revenue over Expense Margin

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Assets to Liabilities

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Debt to Net Assets (Equity)

0

10

20

30

40

50

60

70

80

90

Days of Cash

0

100

200

300

400

500

600

700

Average Days in Receivables

Page 1 of 2

Historical Ratio Dashboard

For the 13 Month Period ended June 30, 2020

$- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000

$10,000,000

Cash Balance

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

Revenue per Month

$- $500,000

$1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000

Expenses per Month

$(1,500,000)

$(1,000,000)

$(500,000)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Margin per Month

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

Total Line of Credit Outstanding

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Total Liabilities

Page 2 of 2

YTD FY 2020 TOTAL CONSOLIDATED REVENUE $50,201,156

YTD FY 2020 TOTAL CONSOLIDATED EXPENSES $48,212,960

Southeast, Inc. Revenue & Expenses by Category

ADAMH

22.6%

1st/3rd Party

2.0%

Medicare

2.8%

Medicaid

23.6%

Contracts

14.3%

In-Kind

0.0%

Pharmacy

31.7%

Other

3.0%

Revenue

Salaries

49.6%

Benefits

12.1%

Contracts

3.1%

Supplies

0.9%

Oper. Exp.

4.9%

Office Exp.

3.8%

Transportation

1.4%

Building

4.7%

Deprec.

2.0%

In-Kind

0.0%

Other

0.7%

Pharmacy

17.0%

Expenses

4

Southeast, Inc. j bell

Investment Funds 7/19/2020

AMERICAN FUNDS

As of

06/30/20

As of

6/30/19

As of

7/1/19

GAIN/(LOSS)

7/1/19 -

6/30/20

% of

Gain/(Loss) As of 1/1/20

GAIN/(LOSS)

1/1/20-6/30/20 Percent

AMCAP Fund - A 643,812 581,134 581,134 62,678 10.8% 631,889 11,923 1.9%

EUROPACIFIC GROWTH FUND 243,671 237,121 237,121 6,551 2.8% 256,384 (12,713) (5.0)%

GROWTH FUND OF AMERICA 813,037 698,304 698,304 114,733 16.4% 759,974 53,063 7.0%

NEW WORLD FUND-A (Growth) 82,284 78,678 78,678 3,607 4.6% 84,995 (2,711) (3.2)%

CAPITAL WORLD GROWTH & INCOME 512,000 501,039 501,039 10,961 2.2% 543,917 (31,918) (5.9)%

FUNDAMENTAL INVESTORS 1,021,065 976,696 976,696 44,369 4.5% 1,082,781 (61,716) (5.7)%

WASHINGTON MUTUAL INVESTORS FUND 760,052 760,663 760,663 (611) (0.1)% 831,638 (71,587) (8.6)%

CAPITAL INCOME BUILDER (Equity Income) 1,212,302 1,237,974 1,237,974 (25,673) (2.1)% 1,311,437 (99,136) (7.6)%

INCOME FUND OF AMERICA (Equity Income) 1,707,023 1,728,271 1,728,271 (21,249) (1.2)% 1,856,736 (149,713) (8.1)%

AMERICA HIGH INCOME TRUST (Bond) 813,863 840,728 840,728 (26,865) (3.2)% 868,866 (55,003) (6.3)%

INTERMEDIATE BOND FUND of AMERICA 994,695 930,942 930,942 63,753 0.0% 941,174 53,521 0.0%

CAPITAL WORLD BOND 949,138 917,218 917,218 31,919 3.5% 928,028 21,109 2.3%

CASH MGT TRUST OF AMERICA 134 133 133 2 1.2% 134 0 0.0%

TOTAL AMERICAN FUND INVESTMENTS 9,753,076 9,488,901 9,488,901 264,175 2.8% 10,097,955 (344,879) (3.4)%

BANK FUNDS

PREMIER MONEY MARKET/Scholarship Fd. 280,495 279,364 279,364 1,131 0.4% 280,142 353 0.1%

5/3 BANK - Money Market & Fixed Income 1,154,831 2,904,292 2,904,292 (1,749,461) (60.2)% 3,061,201 (1,906,370) (62.3)%

TOTAL BANK FUND INVESTMENTS 1,435,326 3,183,656 3,183,656 (1,748,331) (54.9)% 3,341,343 (1,906,017) (57.0)%

TOTAL SOUTHEAST INVESTMENTS 11,188,401 12,672,557 12,672,557 (1,484,156) (11.7)% 13,439,298 (2,250,897) (16.7)%

FISCAL YEAR CALENDAR YEAR