Medical Information Technology 10-K 31 Jan 20 2019 FY Annual report Financial data

Document and Entity Information

Document and Entity Information	12 Months Ended
	Dec. 31, 2019USD ($)shares
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Registrant Name	Medical Information Technology, Inc.
Entity Central Index Key	0001011452
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Public Float | $	$ 0
Entity Common Stock, Shares Outstanding | shares	37,190,854
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false

Balance Sheets

Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Cash and equivalents	$ 14,997,613	$ 23,095,977	$ 17,436,627
Marketable securities	421,554,499	268,638,359	306,086,429
Trade receivables, net of reserve	36,575,028	36,760,812	50,522,946
Contract assets, prepaid and other	14,223,037	12,077,935	12,376,569
Current assets	487,350,177	340,573,083	386,422,571
Computer equipment	13,339,425	13,979,609	14,463,275
Furniture and fixtures	76,135,675	92,804,040	83,719,079
Buildings	190,105,517	240,288,774	250,962,956
Land	26,717,577	40,959,230	43,163,211
Accumulated depreciation	138,527,057	175,832,443	178,192,159
Fixed assets	167,771,137	212,199,210	214,116,362
Other assets	7,193,998	8,430,515	9,466,338
Deferred tax assets	7,160,037	8,257,144	9,223,246
Total assets	669,475,349	569,459,952	619,228,517
Accounts payable	211,391	701,524	227,663
Taxes payable	3,111,878	1,825,528	3,882,391
Accrued expenses	24,327,709	23,916,832	22,831,337
Deferred revenue	39,711,207	52,666,651	57,619,181
Current liabilities	67,362,185	79,110,535	84,560,572
Deferred tax liabilities	26,951,474	12,409,407	19,154,929
Tax reserves	17,411,282	17,039,282	18,584,766
Total liabilities	111,724,941	108,559,224	122,300,267
Common stock value	37,190,854	37,190,854	37,190,854
Additional paid-in capital	122,907,959	122,907,959	122,907,959
Retained income	397,651,595	300,801,915	289,634,133
Unrealized after-tax security gains	0	0	47,195,304
Shareholder equity	557,750,408	460,900,728	496,928,250
Total liabilities and shareholder equity	$ 669,475,349	$ 569,459,952	$ 619,228,517

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock par value	$ 1	$ 1	$ 1
Common stock shares authorized	40,000,000	40,000,000	40,000,000
Common stock shares issued	37,165,854	37,140,854	37,115,854
Common stock shares outstanding	37,165,854	37,140,854	37,115,854

Statements of Income and Compre

Statements of Income and Comprehensive Income - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Product revenue	$ 161,975,285	$ 165,487,109	$ 154,802,239
Service revenue	331,869,347	322,701,637	326,101,656
Total revenue	493,844,632	488,188,746	480,903,895
Operations, development	332,551,702	334,612,704	328,502,568
Selling, G & A	96,813,268	88,808,769	88,420,193
Operating expense	429,364,970	423,421,473	416,922,761
Operating income	64,479,662	64,767,273	63,981,134
Other income	21,463,262	25,980,379	38,622,542
Gain on sale of property	88,948,907	0	0
Change in unrealized security gains	57,809,294	(23,416,834)	0
Other expense	6,112,326	7,124,656	6,117,897
Pretax income	226,588,799	60,206,162	96,485,779
State income tax (benefit)	7,623,403	(387,076)	3,535,566
Federal income tax	38,808,203	4,387,442	15,521,637
Income tax	46,431,606	4,000,366	19,057,203
Net income	$ 180,157,193	$ 56,205,796	77,428,576
Change in unrealized after-tax security gains			779,211
Comprehensive income			$ 78,207,787

Statements of Shareholder Equit

Statements of Shareholder Equity - USD ($)	Total	Common Stock Paid-in capital	Retained income	Other Comprehensive
Balance at Dec. 31, 2016	$ 523,534,697	$ 160,098,813	$ 317,019,791	$ 46,416,093
Net revenue recognition standard adjustment	(12,580,916)		(12,580,916)
Net income	77,428,576		77,428,576
Change in unrealized after-tax security gains	779,211			779,211
Dividends paid	(92,233,318)		(92,233,318)
Balance at Dec. 31, 2017	496,928,250	160,098,813	289,634,133	47,195,304
Net income	56,205,796		56,205,796
Dividends paid	(92,233,318)		(92,233,318)
Cumulative effect of accounting change			47,195,304	$ (47,195,304)
Balance at Dec. 31, 2018	460,900,728	160,098,813	300,801,915
Net income	180,157,193		180,157,193
Dividends paid	(83,307,513)		(83,307,513)
Balance at Dec. 31, 2019	$ 557,750,408	$ 160,098,813	$ 397,651,595

Statements of Cash Flows

Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Cash Flows [Abstract]
Net income	$ 180,157,193	$ 56,205,796	$ 77,428,576
Depreciation and amortization expense	13,344,746	14,396,957	14,433,528
Loss (gain) on sale of marketable securities	(2,945,147)	272,229	(17,464,043)
Loss (gain) on sale of fixed assets	(88,416,610)	(5,051,454)	(864,218)
Change in unrealized securities	(57,809,294)	23,416,834	0
Change in trade receivables, net of reserve	185,784	13,762,134	(8,948,463)
Change in contract assets, prepaid and other	(2,145,102)	298,634	(5,973,753)
Change in deferred tax assets	1,097,107	966,102	9,069,958
Change in accounts payable	(490,133)	473,861	5,048
Change in taxes payable	1,286,350	(2,056,863)	1,230,324
Change in accrued expenses	410,877	1,085,495	289,200
Change in deferred revenue	(12,955,444)	(4,952,530)	9,117,378
Change in deferred tax liabilities	14,542,067	(6,745,522)	(13,341,414)
Change in tax reserves	372,000	(1,545,484)	355,593
Net cash from operating activities	46,634,394	90,526,189	65,337,714
Purchases of marketable securities	(172,879,796)	(11,515,761)	(27,705,747)
Sales of marketable securities	80,718,097	25,274,768	66,146,385
Purchases of fixed assets	(5,382,609)	(14,541,509)	(10,375,066)
Sales of fixed assets	125,163,796	8,238,158	1,867,600
Change in other assets	955,267	(89,177)	309,108
Net cash from investing activities	28,574,755	7,366,479	30,242,280
Dividends paid	(83,307,513)	(92,233,318)	(92,233,318)
Net cash used in financing activities	(83,307,513)	(92,233,318)	(92,233,318)
Net change in cash and equivalents	(8,098,364)	5,659,350	3,346,676
Cash and equivalents at beginning of year	23,095,977	17,436,627	14,089,951
Cash and equivalents at end of year	14,997,613	23,095,977	17,436,627
Supplemental Disclosure:
Cash paid for income taxes	29,057,328	15,403,260	22,313,039
Net revenue recognition standard adjustment	$ 0	$ 0	$ (12,580,916)

Significant Accounting Policies

Significant Accounting Policies	12 Months Ended
	Dec. 31, 2019
Significant Accounting Policies [Abstract]
Significant Accounting Policies	Note 1. Significant Accounting Policies MEDITECH is engaged in the development, manufacture, licensing and support of computer software products for the hospital market. The principal market for its products consists of healthcare providers located primarily in the United States and Canada. The accompanying financial statements reflect the application of certain accounting policies discussed below. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (a) Revenue Recognition MEDITECH follows the provisions of ASC 606, Revenue from Contracts with Customers. MEDITECH enters into perpetual software license contracts which provide for a customer deposit upon contract execution, milestone billings during the implementation phase and fixed monthly support fees thereafter. MEDITECH considers software fees and related implementation fees together as a single performance obligation and classifies it as product revenue in the statement of income. Such revenue is recognized over time with the transfer of promised goods and services to the customer. MEDITECH considers post-implementation support fees as a separate performance obligation and classifies it as service revenue in the statement of income. Such revenue is recognized over time as the related services are rendered. MEDITECH identifies the performance obligations for each contract, determines the transaction price, allocates the price to the performance obligations, and recognizes revenue when (or as) a performance obligation is satisfied on the percent completion method based on completion of specific events. The primary factors taken into consideration involve tracking and measuring the progress of events needed to complete software delivery, training on software usage, interfacing the software with other vendor software, and bringing the software operational at the customer's site. Events identified are estimated at the outset of a contract and the transaction price is allocated equally over said events. Annual studies are conducted on the events required to complete contracted performance obligations and to verify the validity of total events required. Variable consideration is reviewed at the outset of a contract and if present, included in the percentage completion allocation. At December 31, 2019, outstanding performance obligations amounted to $181.7 million, with revenue to be recognized over the next 12-36 months as MEDITECH works with respective customers to schedule the corresponding software delivery and implementation events. MEDITECH's invoices are issued as per contract terms and are typically paid by customers within one month of invoice date. Differences between timing of MEDITECH's invoicing and timing of completed performance obligations are categorized as Deferred Revenues and Contract Assets. Deferred Revenues represent invoices rendered in advance of revenue recognition. Contract Assets represent revenue recognized for which invoices have not yet been rendered. Deferred product revenue was $42.9 million and $29.0 million at December 31, 2018 and December 31, 2019 respectively. During the year a total of $32.7 million was removed and recognized as revenue when specific events were completed. Also, Contract Assets were $5.9 million and $8.6 million at December 31, 2018 and December 31, 2019 respectively. During 2017, 2018 and 2019, additional revenue of $9.1 million, $2.1 million and $4.7 million respectively was claimed based on adoption of the new revenue standard ASC 606 as specific events were attained over time under the new percentage of completion as compared to a point in time using the contract milestone approach previously followed under ASC 985-605. During 2019 MEDITECH delivered and began installation services on a license agreement for which collectability of substantially all of the consideration was not deemed to be probable at the outset of the arrangement. As a result, MEDITECH did not recognize revenue on delivery of product and installation services amounting to $16.5M. All costs incurred for delivery of product and installation services under this arrangement were expensed as incurred. (b) Software Development Costs MEDITECH follows the provisions of ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased or Marketed. ASC 985-20 establishes standards for capitalizing software development costs incurred after technological feasibility of the software development projects is established and the realizability of such capitalized costs through future operations is expected, if such costs become material. MEDITECH's development cost after technological feasibility has been established was immaterial and charged to operations as incurred. (c) Cash and Equivalents MEDITECH considers all highly liquid investments purchased with original maturities of 90 days or less to be cash equivalents. (d) Common Stock Dividend Policy MEDITECH's Board of Directors has full discretion regarding the timing and amounts of dividends paid. (e) Fair Value of Financial Instruments and Concentration of Credit Risk The carrying value of MEDITECH's cash and cash equivalents, accounts receivable and accounts payable approximates their fair value due to the short-term nature of these financial instruments. MEDITECH's marketable securities are carried at fair value. Financial instruments that potentially subject MEDITECH to concentrations of credit risk are principally cash, cash equivalents, marketable securities and accounts receivable. MEDITECH places its cash and cash equivalents in highly rated institutions. Concentration of credit risk with respect to accounts receivable is limited to certain customers to whom MEDITECH makes substantial sales. To reduce risk, MEDITECH routinely assesses the financial strength of its customers and, as a result, believes that its accounts receivable credit risk exposure is limited. MEDITECH maintains a reserve for doubtful accounts but historically has not experienced any significant credit losses related to an individual customer or groups of customers.

Marketable Securities

Marketable Securities	12 Months Ended
	Dec. 31, 2019
Marketable Securities [Abstract]
Marketable Securities	Note 2. Marketable Securities MEDITECH follows the provisions of ASC 321, Investments - Equity Securities, which requires marketable securities to be recorded at fair value and records the unrealized change in marketable securities gains within the income statement. MEDITECH follows the provisions of ASC 820-10, Fair Value Measurements and Disclosures, which provides for expanded disclosure and guidelines to determine fair value of assets and liabilities. ASC 820-10 applies whenever other standards require or permit assets and liabilities to be measured at fair value, but does not expand the use of fair value in any new circumstances. MEDITECH's marketable securities represent assets measured at fair value on a recurring basis, and are considered Level 1 assets as defined by ASC 820-10. The following table indicates the original cost, unrealized pretax gains and losses, and fair value of MEDITECH's securities for the three years ended December 31. The change in unrealized after-tax security gains for 2017 have been accounted for within comprehensive income. The change in unrealized pre-tax security gains for 2018 are now reported within the income statement with the adoption of ASU 2016-01 on January 1, 2018. 2017 2018 2019 Original cost $227,405,667 $217,169,354 $309,435,273 Unrealized pretax gains 78,907,615 62,156,967 113,038,406 Unrealized pretax losses (226,853) (10,687,962) (919,180) Fair value $306,086,429 $268,638,359 $421,554,499

Reserve for Doubtful Accounts

Reserve for Doubtful Accounts	12 Months Ended
	Dec. 31, 2019
Reserve for Doubtful Accounts [Abstract]
Reserve for Doubtful Accounts	Note 3. Reserve for Doubtful Accounts The components of the reserve for doubtful accounts for the three years ended December 31 are as follows: 2017 2018 2019 Reserve at beginning of year $1,575,000 $1,100,000 $1,100,000 Amounts charged to expense 848,739 44,162 1,143,187 Amounts written off (1,323,739) (44,162) (1,143,187) Reserve at end of year $1,100,000 $1,100,000 $1,100,000

Deferred Taxes

Deferred Taxes	12 Months Ended
	Dec. 31, 2019
Deferred Taxes [Abstract]
Deferred Taxes	Note 4. Deferred Taxes Deferred taxes relate to the earlier recognition of certain revenue and the later recognition of certain expense for tax purposes. Deferred tax assets consist primarily of prepaid tax on accrued expenses, prepaid tax on deposits, deferred revenues, and Federal benefit for tax reserves. Deferred tax liabilities consist primarily of tax on unrealized pretax gains. The deferred tax assets and liabilities for the three years ended December 31 are as follows: 2017 2018 2019 Deferred tax assets $9,223,246 $8,257,144 $7,160,037 Deferred tax liabilities 19,154,929 12,409,407 26,951,474

Fixed Assets

Fixed Assets	12 Months Ended
	Dec. 31, 2019
Fixed Assets [Abstract]
Fixed Assets	Note 5. Fixed Assets MEDITECH carries all fixed assets on a cost basis and provides for depreciation in amounts estimated to allocate the costs thereof under the following estimated useful lives. Maintenance costs are expensed as incurred. Improvements are capitalized and depreciated over the asset's useful life. Description Useful Life Computer equipment 3-5 years Furniture and fixtures 7-10 years Buildings 31.5-40 years

Equity Method Investments

Equity Method Investments	12 Months Ended
	Dec. 31, 2019
Equity Method Investments [Abstract]
Equity Method Investments	Note 6. Equity Method Investments MEDITECH follows the provisions of ASC 323-10, Investments - Equity Method and Joint Ventures, and as such, accounts for the equity investment in Meditech South Africa in accordance with the cost method. Meditech South Africa licenses MEDITECH's software technology and re-licenses it to its respective customers. Meditech South Africa serves a market niche which is part of the overall medical market but is outside of the hospital market which MEDITECH serves. MEDITECH believes the fair value of this investment approximates its December 31, 2019 carrying value. During the 2nd quarter 2007 MEDITECH acquired Patient Care Technologies, Inc. (PtCT), a company engaged in the development, manufacture, licensing and support of computer software products for the home healthcare market. MEDITECH accounted for this acquisition under the purchase method of accounting in accordance with ASC 805-10, Business Combinations. PtCT merged with and into MEDITECH effective December 31, 2009. During the 1st quarter 2011 MEDITECH acquired LSS Data Systems, Inc. (LSS), a company engaged in the development, manufacture, licensing and support of ambulatory information system software for physician practices. MEDITECH accounted for this acquisition under the purchase method of accounting in accordance with ASC 805-10, Business Combinations. LSS merged with and into MEDITECH effective December 31, 2013. MEDITECH follows the provisions of ASC 350-20-35 Intangibles, Goodwill and Other. MEDITECH annually assesses qualitative factors of its goodwill assets for impairment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The evaluation assesses all relevant economic, industry, regulatory, and legal facts and circumstances as well as overall performance. If, after assessing the totality of such facts and circumstances, MEDITECH determines that it is more likely than not that the fair value of a reporting unit is not less than its carrying amount, then no further goodwill impairment testing is necessary. In accordance with ASC 805-10 and ASC 350-20-35, on December 31, 2019, MEDITECH concluded no impairment was needed on a qualitative testing basis. The components of other assets for the three years ended December 31 are as follows: 2017 2018 2019 Investments $1,260,054 $1,260,054 $1,284,737 Mortgage notes 130,400 - - Goodwill & intangibles 3,577,533 5,985,033 5,828,565 Other 4,498,351 1,185,428 80,696 Other assets $9,466,338 $8,430,515 $7,193,998

Accrued Expenses

Accrued Expenses	12 Months Ended
	Dec. 31, 2019
Accrued Expenses [Abstract]
Accrued Expenses	Note 7. Accrued Expenses The components of accrued expenses for the three years ended December 31 are as follows: 2017 2018 2019 Accrued bonuses $15,000,000 $15,000,000 $15,000,000 Accrued vacation 5,115,000 5,260,000 5,100,000 Accrued self insurance - 252,136 1,039,469 Other 2,716,337 3,404,706 3,188,240 Accrued expenses $22,831,337 $23,916,832 $24,327,709

Tax Reserves

Tax Reserves	12 Months Ended
	Dec. 31, 2019
Tax Reserves [Abstract]
Tax Reserves	Note 8. Tax Reserves Tax reserves relate to state nexus. Key judgments are reviewed annually and additional adjustments to state nexus were made to reflect current assessments. The years 2016 through 2019 are subject to examination by the IRS, and various years are subject to examination by state tax authorities. MEDITECH accounts for the annual change in tax reserves as part of its provision for income taxes. The components of tax reserves for the three years ended December 31 are as follows: 2017 2018 2019 Potential tax assessment $9,362,662 $8,586,336 $11,952,402 Interest and penalties 9,222,104 8,452,946 5,458,880 Tax reserves $18,584,766 $17,039,282 $17,411,282

Segment Reporting

Segment Reporting	12 Months Ended
	Dec. 31, 2019
Segment Reporting [Abstract]
Segment Reporting	Note 9. Segment Reporting MEDITECH follows the provisions of ASC 280-10, Segment Reporting. Based on the criteria set forth in ASC 280-10, MEDITECH currently operates in one operating segment, medical software and services. MEDITECH derives its revenue from the sale and support of one group of similar products and services. All of MEDITECH's assets are located within the United States. The following table indicates the percentage of revenue based on customer location plus the percentage of revenue from the largest customer for the three years ended December 31 is as follows: 2017 2018 2019 Total revenue $480,903,895 $488,188,746 $493,844,632 United States 88% 87% 88% Canada 11% 11% 10% All others 1% 2% 2% Largest customer 7% 8% 7%

Other Income

Other Income	12 Months Ended
	Dec. 31, 2019
Other Income [Abstract]
Other Income	Note 10. Other Income Other income consists primarily of rents, dividends, interest and realized marketable security activity. The components of other income for the three years ended December 31 are as follows: 2017 2018 2019 Rents $7,012,603 $8,459,277 $5,038,467 Dividends 13,078,062 12,004,775 13,259,412 Interest 203,617 737,103 752,533 Security gains (losses) 17,464,043 (272,229) 2,945,147 Fixed asset gains (losses) 864,217 5,051,453 (532,297) Other income $38,622,542 $25,980,379 $21,463,262

Leases

Leases	12 Months Ended
	Dec. 31, 2019
Leases [Abstract]
Leases	Note 11. Leases On September 19, 2019 MEDITECH sold property including a building, land, furniture, fixtures and equipment for $120 million and recorded a gain of $88.9 million within the Statement of Income. Note that the terms of the sale allow MEDITECH to hold a small short term lease until its staff can be relocated. Prior to the sale, the property was a mixed use facility with the majority of space available for lease. Accordingly, the following disclosures have been updated to reflect the sale. MEDITECH follows the provisions of ASC 842, Leases, which requires improved disclosure on timing and uncertainties of cash flow arising from leases. MEDITECH owns all 8 facilities it occupies, containing 1.1 million square feet of office space. MEDITECH occupies 87% of the space and the remainder is leased to various tenants. All are operating leases. Related operating expense are allocated based on square footage ratio of leased to MEDITECH space. The length of MEDITECH's lease agreements vary and may include a rent-free period, extension options, or escalated lease payment. There are no agreements with termination options or variable payments dependent on outside variables. MEDITECH recognizes lease income and related brokerage fees on a straight-line basis for all agreements. MEDITECH will not consider a lease extended until an amendment is signed by both parties, at which point it is accounted for as a new lease. When a lease agreement is entered into between MEDITECH (lessor) and another party (lessee), the agreement may include non-lease components, being services such as cleaning, utilities, security and grounds maintenance. The company does not separate the lease and non-lease components and treats all as a single lease component. In all cases there is a provision that requires the lessee to pay a proportional share of real estate taxes on a quarterly basis over and above the base year of the lease. Such costs are considered variable and a reimbursement of costs MEDITECH has paid, which are expensed as incurred. MEDITECH does not lease other property and equipment in its operations. All contracts the company has with vendors are reviewed annually for identification of lease components and none exist. Lease income was $7.0 million, $8.5 million and $5.0 million for the years ended on December 31, 2017, 2018 and 2019 respectively. Such income is included within Other Income for financial reporting purpose. Cash Flow projections through the end of all outstanding lease terms for properties currently under lease commitment at December 31, 2019 is as follows: Year Cash Flow 2020 4,018,000 2021 1,454,000 2022 222,000 2023 44,000 After 0 Investments in Operating leases are as follows at December 31, 2019: Building and Office Space, at cost $28,951,486 Lease Origination Costs 216,273 Accumulated Depreciation (9,376,903) Net Investment in Operating Leases $19,790,856

Other Expense

Other Expense	12 Months Ended
	Dec. 31, 2019
Other Expense [Abstract]
Other Expense	Note 12. Other Expense Other expense consists primarily of rental costs and charitable contributions. The components of other expense for the three years ended December 31 are as follows: 2017 2018 2019 Rental costs $5,267,922 $6,305,610 $5,185,597 Charitable contributions 755,000 735,000 755,000 Other 94,975 84,046 171,729 Other expense $6,117,897 $7,124,656 $6,112,326

Income Tax Accounting

Income Tax Accounting	12 Months Ended
	Dec. 31, 2019
Income Tax Accounting [Abstract]
Income Tax Accounting	Note 13. Income Tax Accounting MEDITECH follows the provisions of ASC 740-10, Accounting for Income Taxes. The current and deferred components of the State and Federal income taxes for the three years ended December 31 are as follows: 2017 2018 2019 State current $3,225,483 $443,136 $5,626,874 State deferred 310,083 (830,212) 1,996,529 State income tax $3,535,566 ($387,076) $7,623,403 Federal current $20,103,177 $9,336,650 $24,427,084 Federal deferred (4,581,540) (4,949,208) 14,381,119 Federal income tax $15,521,637 $4,387,442 $38,808,203

Income Tax

Income Tax	12 Months Ended
	Dec. 31, 2019
Income Tax [Abstract]
Income Tax	Note 14. Income Tax During 2017 the Tax Cut and Jobs Act reduced 2018 corporate tax rate from 35% to 21% requiring adjustment to 2017 deferred taxes. The effective income tax for the three years ended December 31 is as follows: 2017 2018 2019 Statutory U.S. income tax $33,770,023 $12,643,294 $47,583.648 State income taxes net of federal benefit 2,298,117 (305,790) 5,718,392 Dividend income and FDII exclusion (3,868,286) (1,755,823) (1,803,486) Federal R&D tax credit (4,942,682) (6,655,571) (6,825,117) Tax code revision (8,818,896) - - Other 618,927 74,256 1,758,169 Income tax $19.057,203 $4,000,366 $46,431,606

Earnings Per Share

Earnings Per Share	12 Months Ended
	Dec. 31, 2019
Earnings Per Share [Abstract]
Earnings Per Share	Note 15. Earnings Per Share MEDITECH follows the provisions of ASC 260-10, Earnings per Share, which requires reporting both basic and diluted earnings per share. MEDITECH has no common share equivalents such as preferred stock, warrants or stock options which would dilute earnings per share. Thus, earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the three years ended December 31. In general, the average number of shares reflects the annual issuance of shares sold to staff members in February pursuant to the 2004 Stock Purchase Plan and the annual issuance of shares contributed to the MEDITECH Profit Sharing Trust in December. 2017 2018 2019 Net income $77,428,576 $56,205,796 $180,157,193 Average number of shares 37,190,854 37,190,854 37,190,854 Earnings per share $2.08 $1.51 $4.84

Comprehensive Income Presentati

Comprehensive Income Presentation	12 Months Ended
	Dec. 31, 2019
Comprehensive Income Presentation [Abstract]
Comprehensive Income Presentation	Note 16. Comprehensive Income Presentation Prior to January 1, 2018, MEDITECH followed the provisions of ASU 2011-05, Comprehensive Income, with respect to marketable securities which establishes standards for reporting comprehensive income and its components in financial statements. MEDITECH's Comprehensive income, prior to the adoption of ASU 2016-01, is the total of net income and unrealized after-tax gains or losses on marketable securities classified as available for sale. Results for the year ended December 31, 2017 is as follows: 2017 Unrealized after-tax gains arising during the period on securities existing at period end $13,065,056 Unrealized after-tax gains arising before the period on securities sold during the period (12,285,845) Change in unrealized after-tax security gains $779,211 With the adoption of ASU 2016-01, Financial Instruments, Recognition and Measurement and Disclosure of Financial Assets and Liabilities, which updates certain aspects of recognition, measurement and disclosure of financial instruments, on January 1, 2018, MEDITECH has no elements of other comprehensive income. The unrealized change in marketable securities gains is now recorded within the Income Statement, a presentation change. The primary effect is the inclusion of such fluctuations in the period's earnings per share calculation presented in Note 14. Additionally, there is a change in presentation within Shareholder Equity in the Balance Sheets. Lastly the Statements of Cash Flows will separately report such fluctuations. At December 31, 2017, net unrealized marketable securities gains amounted to $78.7 million. The after-tax portion originally recorded within equity of $47.2 million was reclassified to retained income on January 1, 2018 upon adoption of ASU 2016-01. Unrealized marketable securities gains decreased $23.4 million during 2018 but increased $57.8 million during 2019.

Qualified Profit Sharing Plan

Qualified Profit Sharing Plan	12 Months Ended
	Dec. 31, 2019
Qualified Profit Sharing Plan [Abstract]
Qualified Profit Sharing Plan	Note 17. Qualified Profit Sharing Plan MEDITECH has no obligation for post-employment or post-retirement benefits. MEDITECH maintains a qualified profit sharing plan which provides deferred compensation to substantially all of its staff members. Contributions to the plan are at the discretion of the Board of Directors and may be in the form of cash and shares of MEDITECH stock. The Company has contributed $9 million in cash to the Trust in 2017 and 2018, and $15 million in 2019.

Litigation

Litigation	12 Months Ended
	Dec. 31, 2019
Litigation [Abstract]
Litigation	Note 18. Litigation From time to time, the Company is a party to or may be threatened by litigation in the ordinary course of its business. The Company regularly analyzes current information, including, as applicable, the Company's defenses and insurance coverage and, as necessary, provides accruals for probable and estimable liabilities for the eventual disposition of these matters. The Company is not a party to any material legal proceedings.

Supplemental Data

Supplemental Data	12 Months Ended
	Dec. 31, 2019
Supplemental Data [Abstract]
Supplemental Data	Note 19. Supplemental Data Unaudited operating results by quarter for the three years ended December 31 are as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2017 Year Total revenue $117,152,968 $116,723,292 $121,891,463 $125,136,172 $480,903,895 Operating income 13,249,937 13,246,241 17,215,933 20,269,023 63,981,134 Net income 14,507,354 14,518,974 17,462,909 30,939,339 77,428,576 Net income per share $0.39 $0.39 $0.47 $0.83 $2.08 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2018 Year Total revenue $122,368,603 $125,023,182 $119,108,936 $121,688,025 $488,188,746 Operating income 15,773,695 17,998,545 14,184,272 16,810,761 64,767,273 Net income 2,822,220 24,126,675 19,163,837 10,093,064 56,205,796 Net income per share $0.08 $0.65 $0.52 $0.27 $1.51 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2019 Year Total revenue $115,359,711 $119,954,865 $121,205,017 $137,325,039 $493,844,632 Operating income 10,606,958 15,078,671 12,882,334 25,911,699 64,479,662 Net income 36,147,902 16,315,075 90,796,290 36,897,926 180,157,193 Net income per share $0.97 $0.44 $2.44 $0.99 $4.84