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Interpret the organizations statements of cash flows.

Use ratio analysis to identify the organizations specific financial strengths and weaknesses. Focus on key findings and one or two ratios per category. Also, use graphs or other techniques to summarize the data.

Write about the organizations profitability/ income. One of the most popular ratios used to gauge profitability (income) is net income.

Calculate the companys leverage or debt level. One of the most popular debt ratios is debt equity.

Research the companys liquidity (access to cash). One of the most popular liquidity measures are referred to as working capital.

Summarize your evaluation of the organizations financial condition and present your views on the potential underlying economic and managerial factors that might have caused any problems that surfaced in the financial and operating analysis.

Make any recommendations for upper level management in terms of improving performance based on the ratios that you believe the organization should follow to ensure future financial soundness

2020 2019 $ $ 1,642,912 92 Assets Current assets: Cash and cash equivalents Assets limited as to use, held by trustee Short term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and other Total current assets Investments Investments at equity Investments in University managed pools Property and equipment, net Right of use lease assets Other assets Total assets 654,342 165,737 125,082 108,587 2,696,752 689,110 116,975 1,610,737 3,646,012 341,580 58,533 $ 9,159,699 505,509 11 399,639 685,425 93,529 69,831 84,524 1,838,468 657,554 97,963 1,478,554 3,691,015 78,360 $ 7,841,914 $ 557,284 275,099 103,779 29,918 114,235 228,200 Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities Accrued salaries and related benefits Due to related parties Third-party payor settlements Current portion of long-term debt Debt subject to remarketing arrangements Operating lease liabilities, current Self-insurance reserves and other Total current liabilities Self-insurance reserves and other, net of current portion Swap liabilities Operating lease liabilities, non-current Other long-term liabilities Pension liability Long-term debt, net of current portion Total liabilities Net assets: Without donor restrictions: Stanford Health Care Noncontrolling interests Total without donor restrictions With donor restrictions Total net assets Total liabilities and net assets $ 908,249 287,411 52,128 55,112 116,045 168,200 76,066 58,186 1,721,397 224,858 353,292 287,053 180,333 8,655 2,056,663 4,832,251 59,424 1,367,939 174,040 316,796 150,464 17,048 1,592,979 3,619,266 4,169,459 24,446 4,193,905 133,543 4,327,448 $ 9,159,699 3,518,964 26, 3,545,875 676,773 4,222,648 $ 7,841,914 (in thousands of dollars) 2020 2019 Operating revenues and other support: Net patient service revenue $ 5,140,938 $ 5,113,052 Premium revenue 116.971 106,130 Grants - COVID-19 124,551 Other revenue 174.293 157,757 Net assets released from restrictions used for operations 10.823 13,063 Total operating revenues and other support 5,567,576 5.390,002 Operating expenses: Salaries and benefits 2,548,259 2,302,399 Professional services 38,463 41,300 Supplies 820,403 727,136 Purchased services 1,458,959 1,350.708 Depreciation and amortization 257.725 190,283 Interest 68,019 42,431 Other 460,483 483,258 Expense recoveries from related parties (105.779) (130.800) Total operating expenses 5,546,532 5,006,715 Income from operations 21.044 383.287 Interest and investment income 43,973 42,904 Earnings on equity method investments 19,592 8.315 Change in value of University managed pools and other 161,720 76,748 Swap interest and change in value of swap agreements (53.722) (146,794) Other components of net periodic benefit costs (2 070) Excess of revenues over expenses 190.537 364,460 Other changes in net assets without donor restrictions: Transfers to Stanford University (98,387) (120,090) Change in net unrealized (loss) gain on investments (1.249) 22,825 Net assets released from restrictions used for: Purchase of property and equipment 3.248 977 Purchase of property and equipment - New Stanford Hospital 555, 219 Change in pension and postretirement liability 1,042 (26.422) Noncontrolling capital distribution (2.400) Increase in net assets without donor restrictions 648,030 241,750 Changes in net assets with donor restrictions: Transfers from (to) Stanford University 162 (316) Contributions and other 22.084 31,079 Investment income 929 815 Gains on University managed pools 2.885 2,176 Net assets released from restrictions used for: Operations (10,823) (13,063) Purchase of property and equipment (3.248) (977) Purchase of property and equipment - New Stanford Hospital (555,219) (Decrease) increase in net assets with donor restrictions (543.230) 19.71 Increase in net assets 104,800 261,464 Net assets, beginning of year 4,222,648 3,961,184 Net assets, end of year $ 4,327,448 $ 4.222.648 The accompanying notes are an integral part of these consolidated financial statements. (in thousands of dollars) 2020 2019 $ 107,265 (2.465) 104,800 $ 253,280 8.184 261,464 254,619 36,496 (125,020) (36,916) (20.784) (23,055) 98,205 19.885 188,878 134,269 (76.748) (23,391) (6.241) (45,967) 120.406 31,083 (8.288) (145,207) 509,198 12.312 25,194 49.580 782,102 (62,348) (8,388) (48,251) 107,407 65,609 (4,556) 38,690 640.833 (50,217) 464.921 Cash flows from operating activities: Change in Stanford Health Care net assets Change in noncontrolling interests Total change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization Change in fair value of interest rate swaps Increase in value of University managed pools Unrealized gains on investments Excess of income on equity method investees over distributions received Contributions received for long lived assets or endowment Net equity transfers to/from related parties Premiums received from bond issuance Changes in operating assets and liabilities: Patient accounts receivable Due to related parties Other receivables, inventory, other assets, prepaid expenses and other Accounts payable, accrued liabilities and pension liabilities Accrued salaries and related benefits Third-party payor settlements Self-insurance reserves Cash provided by operating activities Cash flows from investing activities: Purchases of investments Sales of investments Purchases of investments at equity Purchases of investments in University managed pools Sales of investments in University managed pools Swap settlement payments, net Purchases of property and equipment Cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from issuance of debt Costs of issuance of debt Payment of long-term debt and finance lease obligations Contributions received for long lived assets or endowment Net equity transfers to/from related parties Cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental data: Cash and cash equivalents as shown on the consolidated balance sheets Restricted cash included in assets limited as to use, held by trustee Total cash and cash equivalents as shown on the statement of cash flows Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized Supplemental disclosures of non cash information: (Decrease) increase in payables for property and equipment Equity transfers to related parties, net (6,774) 1,076 (16,825) (310,641) 81.540 (580,481) 446,579 (11,244) (2.850) 2.586 (12.595) (553,642) (711,647) 470, 120 (4,006) (74,134) 24.015 (142, 153) 273,842 1.137,484 505,520 $ 1.643,004 (98) (14,610) 45,952 (107.166) (75.922) (146.736) 652.256 $ 505,520 $1,642,912 92 $1,643,004 $ 505,509 11 $ 505,520 $ 69,105 $ 43,602 $ (100,190) (3,012) $ 48,461 (47,096) 2020 2019 $ $ 1,642,912 92 Assets Current assets: Cash and cash equivalents Assets limited as to use, held by trustee Short term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and other Total current assets Investments Investments at equity Investments in University managed pools Property and equipment, net Right of use lease assets Other assets Total assets 654,342 165,737 125,082 108,587 2,696,752 689,110 116,975 1,610,737 3,646,012 341,580 58,533 $ 9,159,699 505,509 11 399,639 685,425 93,529 69,831 84,524 1,838,468 657,554 97,963 1,478,554 3,691,015 78,360 $ 7,841,914 $ 557,284 275,099 103,779 29,918 114,235 228,200 Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities Accrued salaries and related benefits Due to related parties Third-party payor settlements Current portion of long-term debt Debt subject to remarketing arrangements Operating lease liabilities, current Self-insurance reserves and other Total current liabilities Self-insurance reserves and other, net of current portion Swap liabilities Operating lease liabilities, non-current Other long-term liabilities Pension liability Long-term debt, net of current portion Total liabilities Net assets: Without donor restrictions: Stanford Health Care Noncontrolling interests Total without donor restrictions With donor restrictions Total net assets Total liabilities and net assets $ 908,249 287,411 52,128 55,112 116,045 168,200 76,066 58,186 1,721,397 224,858 353,292 287,053 180,333 8,655 2,056,663 4,832,251 59,424 1,367,939 174,040 316,796 150,464 17,048 1,592,979 3,619,266 4,169,459 24,446 4,193,905 133,543 4,327,448 $ 9,159,699 3,518,964 26, 3,545,875 676,773 4,222,648 $ 7,841,914 (in thousands of dollars) 2020 2019 Operating revenues and other support: Net patient service revenue $ 5,140,938 $ 5,113,052 Premium revenue 116.971 106,130 Grants - COVID-19 124,551 Other revenue 174.293 157,757 Net assets released from restrictions used for operations 10.823 13,063 Total operating revenues and other support 5,567,576 5.390,002 Operating expenses: Salaries and benefits 2,548,259 2,302,399 Professional services 38,463 41,300 Supplies 820,403 727,136 Purchased services 1,458,959 1,350.708 Depreciation and amortization 257.725 190,283 Interest 68,019 42,431 Other 460,483 483,258 Expense recoveries from related parties (105.779) (130.800) Total operating expenses 5,546,532 5,006,715 Income from operations 21.044 383.287 Interest and investment income 43,973 42,904 Earnings on equity method investments 19,592 8.315 Change in value of University managed pools and other 161,720 76,748 Swap interest and change in value of swap agreements (53.722) (146,794) Other components of net periodic benefit costs (2 070) Excess of revenues over expenses 190.537 364,460 Other changes in net assets without donor restrictions: Transfers to Stanford University (98,387) (120,090) Change in net unrealized (loss) gain on investments (1.249) 22,825 Net assets released from restrictions used for: Purchase of property and equipment 3.248 977 Purchase of property and equipment - New Stanford Hospital 555, 219 Change in pension and postretirement liability 1,042 (26.422) Noncontrolling capital distribution (2.400) Increase in net assets without donor restrictions 648,030 241,750 Changes in net assets with donor restrictions: Transfers from (to) Stanford University 162 (316) Contributions and other 22.084 31,079 Investment income 929 815 Gains on University managed pools 2.885 2,176 Net assets released from restrictions used for: Operations (10,823) (13,063) Purchase of property and equipment (3.248) (977) Purchase of property and equipment - New Stanford Hospital (555,219) (Decrease) increase in net assets with donor restrictions (543.230) 19.71 Increase in net assets 104,800 261,464 Net assets, beginning of year 4,222,648 3,961,184 Net assets, end of year $ 4,327,448 $ 4.222.648 The accompanying notes are an integral part of these consolidated financial statements. (in thousands of dollars) 2020 2019 $ 107,265 (2.465) 104,800 $ 253,280 8.184 261,464 254,619 36,496 (125,020) (36,916) (20.784) (23,055) 98,205 19.885 188,878 134,269 (76.748) (23,391) (6.241) (45,967) 120.406 31,083 (8.288) (145,207) 509,198 12.312 25,194 49.580 782,102 (62,348) (8,388) (48,251) 107,407 65,609 (4,556) 38,690 640.833 (50,217) 464.921 Cash flows from operating activities: Change in Stanford Health Care net assets Change in noncontrolling interests Total change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization Change in fair value of interest rate swaps Increase in value of University managed pools Unrealized gains on investments Excess of income on equity method investees over distributions received Contributions received for long lived assets or endowment Net equity transfers to/from related parties Premiums received from bond issuance Changes in operating assets and liabilities: Patient accounts receivable Due to related parties Other receivables, inventory, other assets, prepaid expenses and other Accounts payable, accrued liabilities and pension liabilities Accrued salaries and related benefits Third-party payor settlements Self-insurance reserves Cash provided by operating activities Cash flows from investing activities: Purchases of investments Sales of investments Purchases of investments at equity Purchases of investments in University managed pools Sales of investments in University managed pools Swap settlement payments, net Purchases of property and equipment Cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from issuance of debt Costs of issuance of debt Payment of long-term debt and finance lease obligations Contributions received for long lived assets or endowment Net equity transfers to/from related parties Cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental data: Cash and cash equivalents as shown on the consolidated balance sheets Restricted cash included in assets limited as to use, held by trustee Total cash and cash equivalents as shown on the statement of cash flows Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized Supplemental disclosures of non cash information: (Decrease) increase in payables for property and equipment Equity transfers to related parties, net (6,774) 1,076 (16,825) (310,641) 81.540 (580,481) 446,579 (11,244) (2.850) 2.586 (12.595) (553,642) (711,647) 470, 120 (4,006) (74,134) 24.015 (142, 153) 273,842 1.137,484 505,520 $ 1.643,004 (98) (14,610) 45,952 (107.166) (75.922) (146.736) 652.256 $ 505,520 $1,642,912 92 $1,643,004 $ 505,509 11 $ 505,520 $ 69,105 $ 43,602 $ (100,190) (3,012) $ 48,461 (47,096)

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