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JEFFERSON COMMUNITY HEALTH CARE CENTERS, INC.

FINANCIAL STATEMENTS

December 31, 2016 and 2015

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Jefferson Community Health Care Centers, Inc. Table of Contents

December 31, 2016

REPORT Independent Auditors' Report

FINANCIAL STATEMENTS Statements of Financial Position

Statements of Activities

Statements of Cash Flows

Notes to the Financial Statements

SUPPLEMENTARY INFORMATION Statement of Functional Expenses - 2016

Statement of Functional Expenses - 2015

Schedule of Compensation, Benefits, and Other Payments to Agency Flead

4

5

6

7

16

17

18

UNIFORM GUIDANCE COMPLIANCE AND GOVERNANCE AUDITING STANDARDS REPORTS Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 19

Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance

Schedule of Expenditures of Federal Awards

Notes to Schedule of Expenditures of Federal Awards

Schedule of Findings and Questioned Costs

Status of Prior Year Findings

21

24

25

26

27

Report

A CRI 0 ^ p p Carr, Riggs & Ingram, LLC RIGGS & 111 Veterans Blvd. INGRAM Suite 350

CPAs and Advisors Metairie, Louisiana 70005

(504) 833-2436 (504) 484-0807 (fax) www.CRIcpa.com

Independent Auditors' Report

Board of Directors of Jefferson Community Health Care Centers, Inc.

We have audited the accompanying financial statements of Jefferson Community Health Care Centers, Inc. ("JCHCC") (a nonprofit health care entity), which comprise the statements of financial position as of December 31, 2016 and 2015, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the LJnited States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to JCHCC's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of JCHCC's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion; the financial statements referred to above present fairly; in ail material respectS; the financial position of JCHCC as of December 31; 2016 and 2015; and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses on pages 16-17 and the schedule of compensation; benefits; and other payments to agency head on page 18 are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures; including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themseiveS; and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion; the information is fairly stated in ail material respects in relation to the financial statements as a whole.

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awardS; as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200; Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures; including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themseiveS; and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion; the information is fairly stated; in ail material respectS; in relation to the financial statements as a whole.

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other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2017 on our consideration of JCHCC's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering JCHCC's internal control over financial reporting and compliance.

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June 30, 2017

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Financial Statements

Jefferson Community Health Care Centers, Inc.

Statements of Financial Position

December 31, 2016 2015

Assets

Current Assets Cash and cash equivalents Investments

Grants receivable Patient and contracts receivable, net Other current assets

s 1,524,435

753,177 47,277

$ 574,285 1,520,157

350,000

628,787 43,028

Total Current Assets 2,324,889 3,116,257

Non-Current Assets Certificate of deposit - restricted Property and equipment,

net of accumulated depreciation

475,000

3,239,786

475,000

3,193,208

Total Non-Current Assets 3,714,786 3,668,208

Total Assets s 6,039,675 $ 6,784,465 Liabilities and Net Assets

Current Liabilities Managed cash overdraft Accounts payable Accrued expenses

Current portion of long-term debt Deferred revenue

s 76,305 172,778 574,280

35,613 55,404

$ 224,773 140,109

22,889 55,242

Total Current Liabilities 914,380 443,013

Long-term Liabilities Long-term debt 1,920,889 1,830,195

Total Liabilities 2,835,269 2,273,208

Net Assets Unrestricted 3,204,406 4,511,257

Total Net Assets 3,204,406 4,511,257

Total Liabilities and Net Assets s 6,039,675 $ 6,784,465

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

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Statements of Activities

For the years ended December 31, 2016 2015

Unrestricted Revenues, Gains, and Other Support Patient service revenue, net of contractual

allowances and discounts Provision for bad debts

$ 3,460,176 (436,928)

S 3,641,876 (349,189)

Net patient service revenue, less

provision for bad debts Federal program revenues Other program revenues Other Income

3,023,248 4,824,010

406,157 41,904

3,292,687 3,728,848

620,530

24,364

Total Support and Revenues 8,295,319 7,666,429

Net assets released from restrictions - LPHi grant 49,180

Total Unrestricted Support and Revenues 8,295,319 7,715,609

Expenses Program services Support services

7,611,067 1,991,103

7,247,827 1,499,591

Total Expenses 9,602,170 8,747,418

Decrease In Unrestricted Net Assets (1,306,851) (1,031,809)

Temporarily Restricted Net Assets Increase in temporarily restricted net assets - LPHI grant

Net assets released from restrictions

- 49,180

(49,180)

Change In Temporarily Restricted Net Assets

Change In Net Assets (1,306,851) (1,031,809)

Net Assets at beginning of year 4,511,257 5,543,066

Net Assets at end of year S 3,204,406 S 4,511,257

The accompanying notes are an integral part to these financial statements. -5-


Statements of Cash Flows

For the years ended December 31, 2016 2015

Cash flows from operating activities Decrease in net assets s (1,306,851) s (1,031,809) Adjustments to reconcile the change in net assets to cash

and cash equivalents used in operating activities: Depreciation expense 223,214 284,104 Bad debt expense 436,928 349,189 Loss on sale of property and equipment - 1,880

(Increase) decrease in operating assets:

Other assets (4,249) 48,256 Grants receivable 350,000 998,895 Patient and contracts receivable (561,318) (466,633)

Decrease in operating liabilities: Accounts payable (51,995) (517) Accrued expenses 434,171 (119,172) Deferred revenue 162 (91,880)

Net cash used in operating activities (479,938) (27,687)

Cash flows from investing activities Purchase of investments (4,278) (17,383) Proceeds from sale of property and equipment - 3,312 Purchase of property and equipment (269,792) (48,750)

Net cash used in investing activities (274,070) (62,821)

Cash flows from financing activities Managed cash overdraft 76,305 -Principal borrowings on notes payable 140,000 -Principal payments on notes payable (36,582) (25,787)

Net cash (used in) provided by financing activities 179,723 (25,787)

Net decrease in cash and cash equivalents (574,285) (116,295)

Cash and cash equivalents, beginning of year 574,285 690,580

Cash and cash equivalents, end of year s _ s 574,285 Supplementary Disclosure:

Interest paid s 94,049 s 94,469


Jefferson Community Health Care Centers, Inc. Notes to the Financial Statements

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Jefferson Community Health Care Centers, Inc. ("JCHCC") is a nonprofit organization organized under the laws of the State of Louisiana. Its mission is to provide healthcare services, including medical, mental health, optometry, dental, and social services to underinsured and uninsured citizens of Jefferson Parish, Louisiana. JCHCC has four (4) locations: Avondale, Marrero, River Ridge, and Lafitte, Louisiana. Each location is considered a federally qualified health center.

Basis of Accounting

JCHCC's financial statements are prepared on the accrual basis of accounting, whereby revenue is recorded when earned and expenses are recorded when incurred.

Public Support and Revenue

JCHCC receives its support primarily from federal, state, and local governmental agencies. Revenue is recorded on the accrual basis as they are earned, and allowances are provided for receivables that are estimated to be uncollectible. Revenues are considered available for unrestricted use unless specifically restricted by the grant. Prepayments on reimbursement based grants are recorded as deferred revenues until earned. Grants whose restrictions are met in the same reporting period are reported as unrestricted support.

JCHCC extends credit to patients, as well as to third-party intermediaries responsible for medical services provided to patients. In most cases, the amount collected is less than the amount billed. The balance in patient accounts receivable is net of contractual adjustments and an allowance for doubtful accounts. The allowance for doubtful accounts is based upon a review of aging of outstanding receivables, historical collection information and existing economic conditions. Patient accounts receivable are due in full when billed. The allowance was $771,073 and $699,330 at December 31, 2016 and 2015, respectively.

JCHCC's process for determining the appropriate level of the allowance for doubtful accounts

involves judgment, and considers such factors as the age of the underlying receivables, specific

account reviews, historical collection experience, and other external factors that could affect the

collectability of its receivables. Revisions to the allowance for doubtful accounts are recorded as an

adjustment to bad debt expense. Recoveries of accounts receivable previously written off are

recorded as a reduction of the provision for uncollectible accounts when received. JCHCC does not

charge interest on past due accounts.

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NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Revenue

Grant funds for services performed are considered to be earned when qualifying expenditures are made and all other grant requirements have been met and accordingly, when such funds are received, they are recorded as deferred revenue until earned.

Functional Expenses

The cost of program and supporting services has been reported on a functional basis. This requires the allocation of certain costs based on total program costs and estimates made by management.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Property and Equipment

Improvements which significantly extend the useful life of an asset and purchases of furniture, fixtures and equipment in excess of $1,500 are capitalized. The straight line method of depreciation is used for the assets owned by JCHCC. Useful lives of furniture and equipment are between 5-10 years, leasehold improvements are 10 years, and buildings are 40 years.

Income Taxes

JCHCC is a tax exempt organization under Internal Revenue Code Section 501(c)(3) and as such is not subject to income tax. Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by JCHCC and recognize a tax liability if JCHCC has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by JCHCC, and has concluded that as of December 31, 2016 and 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a tax liability or disclosure in the financial statements. JCHCC is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

Cash and Cash Equivalents

Cash is comprised of cash on hand and in banks. JCHCC considers all highly liquid investments available for current use with an original maturity of three months or less to be cash equivalents.

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NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Certificate of Deposit - Restricted

A restricted certificate of deposit, in the amount of $475,000, is held at a local bank as collateral for the note payable described In Note 7 to the financial statements.

Basis of Presentation

JCHCC follows the provisions of Not-For-Profit Entitles Topic of FASB ASC (FASB ASC 958), which establishes external financial reporting for not-for-profit organizations which Includes three basic financial statements and classification of resources Into separate categories of net assets, as follows:

• Unrestricted - Net assets which are free of donor Imposed restrictions; all revenues, expenses, gains and losses that are not changes In permanently or temporarily restricted net assets.

• Temporarily Restricted - Net assets whose use by JCHCC Is limited by donor-Imposed stipulations that either expire by the passage of time or that can be fulfllled or removed by actions of JCHCC pursuant to such stipulations.

• Permanently Restricted - Net assets whose use by JCHCC Is limited by donor-Imposed stipulations that neither expire with the passage of time nor can be fulfllled and removed by actions of JCHCC.

Advertising Expense

JCHCC uses advertising to promote the operations of Its clinics and the costs associated with advertising are expensed when Incurred. Advertising and marketing expenses for the years ended December 31, 2016 and 2015 were $233,620 and $143,188, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation.

Subsequent Events

JCHCC has evaluated subsequent events through June 30, 2017, which Is the date the financial statements were available to be Issued.

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NOTE 2 - CASH AND CASH EQUIVALENTS

Deposits held in noninterest-bearing transaction accounts are aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000. At times during the year, JCHCC exceeded the federally insured deposit amount.

NOTE 3 - FAIR VALUE MEASUREMENTS

FASB ASC 820, Fair Value Measurements and Disclosures {"ASC 820") and FASB ASC 825, Financial Instruments ("ASC 825") require disclosure of fair value information about financial instruments, whether or not recognized in the Statements of Financial Position. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for JCHCC's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. ASC 825 excludes certain financial instruments from its disclosure requirements.

In accordance with FASB ASC 820, JCHCC establishes a fair value hierarchy for inputs used in measuring fair market value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1-Valuations based on adjusted quoted prices in active markets for identical assets or liabilities as of the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly, as of the reporting date.

Level 3 - Valuations based on inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.

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NOTE 3 -FAIR VALUE MEASUREMENTS (CONTINUED)

Investment securities are carried at fair value based on quoted prices In active markets (all Level 1 Measurements) and consist of the following at December 31, 2016 and 2015:

December 31, 2016 2015 U.S. Municipal Bonds $ 833,324 $ 1,191,194 U.S. Corporate Bonds 691,111 328,963

Total S 1,524,435 $ 1,520,157

NOTE 4 - BUSINESS AND CREDIT CONCENTRATIONS

Most of JCHCC's patients are Greater New Orleans residents insured under third-party payor agreements. The mix of revenues from third-party payors for the year ended December 31, 2016 and 2015 were as follows:

December 31, 2016 2015 Medicaid and Medicare 32% 24% Private pay 26% 25% GNOCHC 14% 41% Commercial insurance and

managed care organizations 28% 10%

100% 100%

If significant adverse changes are made at the federal, state, and/or local level regarding the use of community health care centers to provide services to Indigent and underinsured patients, the amount of contract revenue that JCHCC receives could be significantly reduced. This could have an adverse Impact on JCHCC's operations. Its financial position and results of operations. JCHCC's grant revenue was approximately 57% and 49% of total revenues for the years ended December 31, 2016 and 2015, respectively.

NOTE 5 - NET PATIENT SERVICE REVENUE

JCHCC net patient service revenue for the years ended December 31, 2016 and 2015 Is earned under agreements with third-party payors. These agreements with third-party payors provide for payments to JCHCC at amounts different from Its established rates. These third-party payors Include the Medicare and Medicaid programs, health maintenance organizations, and various commercial Insurance and preferred provider organizations.

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NOTE 5 - NET PATIENT SERVICE REVENUE (CONTINUED)

A summary of the payment arrangements with major third-party payors follows:

• Medicare and Medicaid: JCHCC is paid for inpatient acute care services rendered to Medicare and Medicaid program beneficiaries under prospectively determined rates-per-discharge. These rates vary according to a patient classification system that is based on clinical, diagnostic and other factors.

Outpatient services are paid via the outpatient prospective payment system. Outpatient services subject to the outpatient prospective payment system are not subject to cost report settlement with several exceptions, and without regard to the transitional corridor.

• Greater New Orleans Communitv Health Connection ("GNOCHC"): JCHCC also receives reimbursement for services rendered to Medicaid beneficiaries from the GNOCHC waiver program. The GNOCHC program period is from October 2010 through December 2013, with an extension through June 30, 2016, The GNOCHC program expired June 30, 2016.

• Other Agreements: JCHCC has entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payment to JCHCC under these agreements includes prospectively determined rates per discharge, discounts from established charges, prospectively determined daily rates, and capitated per member per month rates.

Presented below is a summary of net patient service revenue for the years ended December 31, 2016 and 2015:

2016 2015 Commercial insurance and managed care organizations S 1,631,892 $ 708,782 GNOCHC 791,157 2,914,053 Medicaid and Medicare 1,923,660 1,721,053 Private Pay 1,493,323 1,746,312 Gross patient service revenue 5,840,032 7,090,200 Less discounts, allowances, and estimated contractual adjustments 2,379,856 3,448,324

Patient service revenue (net of contractual allowances and discounts) S 3,460,176 S 3,641,876

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NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2016 and 2015 consist of the following:

December 31, 2016 2015 Furniture, fixtures, and equipment

Building and leasehold Improvements Land

s 1,651,184 3,033,256

418,750

$ 1,521,392

3,033,256 278,750

Accumulated depreciation (1,863,404) (1,640,190)

Property and equipment, net s 3,239,786 $ 3,193,208

Depreciation expense for the years ended $284,104, respectively.

December 31, 2016 and 2015 was $223,214 and

NOTE 7-LINE OF CREDIT

JCHCC had a line of credit for $200,000 with a bank bearing Interest based on the Wall Street Journal Prime Interest Rate {3.50% at December 31, 2015) plus 1.5 basis points subject to a floor of 4.75%. The line Is secured by JCHCC's deposits at the bank, along with interest In both present and future real property of JCHCC. JCHCC had no outstanding balance on this line of credit as of December 31, 2015. As of December 31, 2016, JCHCC no longer has the line of credit.

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NOTE 8-DEBT

Long-term debt at December 31, 2016 and 2015 consists of the following:

As of December 31, 2016 2015 5.09% collateral mortgage loan, due In monthly Installments of $8,882, Including Interest, through December 2043, secured by the value of JCHCC's land and building. $ 1,341,502 $ 1,378,084

4.25% collateral mortgage loan, due In monthly Installments of $1,438, Including Interest, through November 2021, with a balloon payment due In December 2021 of $78,564, secured by the value of JCHCC's land. 140,000

4.25% CD secured loan, with a balloon payment due In December 2019, secured by the CD held by the lender. 475,000 475,000

Less current portion (35,613) (22,889)

Long-term debt $ 1,920,889 $ 1,830,195

The future scheduled maturities of long-term debt at December 31, 2016 are as follows:

Years ending December 31: 2017 $ 35,613 2018 37,368 2019 514,209 2020 41,142 2021 120,297

Thereafter 1,207,873

Long-term debt $ 1,956,502

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NOTE 9 - CONCENTRATIONS, COMMITMENTS, AND CONTINGENCIES

The primary source of revenue for JCHCC is federal, state and local grants and contracts provided through various funding agencies. The continued success of JCHCC is dependent upon the renewal of grants and contracts from current funding sources as well as JCHCC's ability to obtain new funding.

During the year ended December 31, 2013, JCHCC entered Into two (2) sixty (60) month operating lease agreements for the rental of various office and medical equipment. Additionally, during 2016, JCHCC has entered into a lease for a new facility with an expiration date of June 2021. Rental expenses under these leases and other short term operating leases were approximately $173,492 and $166,433 for the years ended December 31, 2016 and 2015, respectively.

Future minimum lease payments under the operating lease agreements are as follows:

2017 $ 110,069

2018 85,011

2019 78,000

2020 78,000

202 1 39,000

Total $ 390,080

In addition to the leases discussed above, JCHCC also receives rent free use of two other facilities within Jefferson Parish. During 2016, Jefferson Parish decided to terminate the leases and require JCHCC to vacate the premises. JCHCC filed a lawsuit against the Parish to block the eviction and continued to operate at the facilities during 2016. As of the date of this report, JCHCC and Jefferson Parish continue to negotiate the terms of a settlement, the ultimate disposition of which is not known. Management does not expect that the terms of the settlement will require them to vacate the facilities within the next twelve months subsequent to the date of this report. Management believes the outcome of this matter will not have a material adverse effect on JCHCC's financial position.

NOTE 10 - SUBSEQUENT EVENTS

During 2017, JCHCC obtained several operating loans from a local financial Institution. On May 19, 2017, the loans were consolidated into a revolving line of credit maturing on May 19, 2018 with an available amount of $1,113,000 accruing interest at the Prime rate.

JCHCC has evaluated subsequent events through June 30, 2017, the date the financial statements were available to be issued, and other than disclosed above and In Note 9 to the financial statements no events have occurred requiring disclosure or Inclusion In the financial statements.

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Supplementary Information

Jefferson Community Health Care Centers, Inc. Statement of Functional Expenses - 2016

Program Support

For the year ended December 31, 2016 Services Services Total

Salaries and fringe benefits S 4,777,123 $ 1,047,158 $ 5,824,281 Contract labor and services 1,026,164 622,207 1,648,371

Dues and subscriptions 284,592 - 284,592 Supplies 350,393 6,899 357,292 Depreciation expense 178,571 44,643 223,214

Telephone and utilities 271,726 9,080 280,806 Rent and leasing 169,198 4,294 173,492 Repairs and maintenance 106,611 2,503 109,114

Marketing and advertising 163,131 70,489 233,620 Miscellaneous expense 120,206 36,645 156,851 Travel and development 18,720 102,326 121,046

Interest expense 51,727 42,322 94,049 Insurance 87,220 881 88,101 Equipment 938 493 1,431

Information technology 4,747 1,163 5,910

Total Expenses $ 7,611,067 $ 1,991,103 $ 9,602,170


Jefferson Community Health Care Centers, Inc. Statement of Functional Expenses - 2015

For the year ended December 31, 2015

Program

Services

Support

Services Total

Salaries and fringe benefits $ 4,623,929 $ 1,013,906 $ 5,637,835 Contract labor and services 786,124 189,726 975,850

Dues and subscriptions 378,405 - 378,405 Supplies 292,012 5,750 297,762 Depreciation expense 227,283 56,821 284,104

Telephone and utilities 257,208 8,595 265,803 Rent and leasing 162,314 4,119 166,433 Repairs and maintenance 158,705 3,727 162,432

Marketing and advertising 100,004 43,184 143,188 Miscellaneous expense 103,286 25,213 128,499 Travel and development 18,815 102,847 121,662

Interest expense 51,958 42,511 94,469 Insurance 82,352 832 83,184 Equipment 3,677 1,930 5,607

Information technology 1,755 430 2,185

Total Expenses $ 7,247,827 $ 1,499,591 $ 8,747,418



Schedule of Compensation, Benefits, and Other Payments to Agency Head

For the year ended December 31, 2016 Dr. Shondra Williams, CEO

Salary $ 172,567 Benefits - health insurance 6,060 Benefits - retirement -0-Benefits - dental and vision insurance 379 Benefits - other insurance 1,122 Deferred compensation 10,000 Car allowance 6,000 Vehicle provided byJCHCC -0-

Cell phone 582 Dues -0-Vehicle rental -0-

Per diem 1,338 Reimbursements 730 Travel 622 Registration fees 2,799 Conference travel 2,506 Housing 3,823

Unvouchered expenses -0-Special meals -0-Other -0-

Total Compensation, Benefits, and Other Payments s 208,528

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Other Supplementary Information




Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards


We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Jefferson Community Health Care Centers, Inc. ("JCHCC") (a nonprofit organization), which comprise the statement of financial position as of December 31, 2016, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated June 30, 2017.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered JCHCC's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of JCHCC's internal control. Accordingly, we do not express an opinion on the effectiveness of JCHCC's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether JCHCC's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of JCHCC's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the JCHCC's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

June 30, 2017

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Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance


Report on Compliance for Each Major Federal Program

We have audited Jefferson Community Health Care Center, Inc.'s ("JCHCC") (a nonprofit organization) compliance with the types of compliance requirements described in the 0MB Compliance Supplement that could have a direct and material effect on each of JCHCC's major federal programs for the year ended December 31, 2016. JCHCC's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of JCHCC's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about JCHCC's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of JCHCC's compliance.

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Opinion on Health Centers Program

In our opinion, JCHCC complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal programs for the year ended December 31, 2016.

Report on Internal Control Over Compliance

Management of JCHCC is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered JCHCC's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of JCHCC's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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The purpose of this report on internal control over compliance Is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report Is not suitable for any other purpose.

June 30, 2017

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Jefferson Community Health Care Centers, Inc. Schedule of Expenditures of Federal Awards

For the Year Ended December 31, 2016

Grantor CFDA Number Expenditures

Direct Funding:

Health Centers Cluster (CFDA 93.224 and 93527)

Consolidate Health Centers (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Primary Care) 93.224 $ 4,824.010

Total Expenditures of Federal Awards g 4.824.01Q

The accompanying notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.

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Jefferson Community Health Care Centers, Inc. Notes to the Schedule of Expenditures of Federal Awards

NOTE 1 - GENERAL

The accompanying Schedule of Expenditures of Federal Awards presents the revenues from federal awards of JCHCC as defined In Note 1 to JCHCC's basic financial statements. All federal awards were received directly from Federal agencies.

NOTE 2 - BASIS OF ACCOUNTING

The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of JCHCC and Is presented on the accrual basis of accounting. JCHCC elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.

NOTE 3 - RELATIONSHIP TO BASIC FINANCIAL STATEMENTS

Federal awards revenues are reported in JCHCC's basic financial statements as program revenues.

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Jefferson Community Health Care Centers, Inc. Schedule of Findings and Questioned Costs

A. SUMMARY OF AUDITORS' RESULTS

1. The auditors' report expresses an unmodified opinion on the financial statements of Jefferson Community Health Care Centers, Inc. {"JCHCC").

2. No instances of noncompliance material to the financial statements of JCHCC were identified during the audit.

3. No material weaknesses were noted relating to the audit in the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.

4. The Independent Auditor's Report on Compliance for each Major Program and on Internal Control over Compliance Required by the Uniform Guidance expresses an unmodified opinion on all major federal programs.

5. There were no findings that are required to be reported in accordance with 2 CFR Section 200.516(a)

6. The program tested as a major program for the year ended December 31, 2016 was:

Program Title CFDA Number

Health Center Program Cluster - Consolidated Health Centers 93.224

7. The threshold for distinguishing between Type A and Type B programs was $750,000.

8. JCHCC qualified as a low-risk auditee under Section 530 of the Uniform Guidance.

B. FINDINGS RELATED TO THE FINANCIAL STATEMENTS

None Noted

C. FINDINGS RELATED TO COMPLIANCE AND OTHER MATTERS

None Noted

D. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS

None Noted

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Jefferson Community Health Care Centers, Inc. Status of Prior Year Findings

For the Year Ended December 31, 2015

SECTION I. FINDINGS RELATED TO THE FINANCIAL STATEMENTS

Material Weakness

None

Significant Deficiencies

None

SECTION II. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT

None

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