UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2018~~2019

0-28092
(Commission file number)

Medical Information Technology, Inc.
(Exact name of registrant as specified in its charter)

Massachusetts
(State of incorporation)

04-2455639
(IRS Employer Identification Number)

MEDITECH Circle, Westwood, MA
(Address of principal executive offices)

02090
(Zip Code)

781-821-3000
(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Securities Exchange Act: Common Stock, par value $1.00 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files). Yes [X] No [ ]

Page 1 of 2930

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller reporting company [ ] Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes [ ] No [X]

No public trading market exists for the registrant's common stock. There were 37,190,854 shares of common stock, $1.00 par value, outstanding at December 31, ~~2018~~2019.

Index to Form 10-K	Page
Part I
Item 1 - Business	3
Item 1A - Risk Factors	6
Item 1B - Unresolved Staff Comments	6
Item 2 - Properties	6
Item 3 - Legal Proceedings	6
Item 4 - Mine Safety Disclosures	6
Part II
Item 5 - Market for Registrant's Common Equity and Related Shareholder Matters	6
Item 6 - Selected Financial Data	7
Item 7 - Management's Discussion and Analysis of Operating Results and
Financial Condition	7
Item 7A - Quantitative and Qualitative Disclosures About Market Risk	8
Item 8 - Financial Statements and Supplemental Data	9
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure	2223
Item 9A - Controls and Procedures	2223
Item 9B - Other Information	2223
Part III
Item 10 - Directors, Executive Officers and Corporate Governance	2324
Item 11 - Executive Compensation	2627
Item 12 - Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters	2728
Item 13 - Certain Relationships and Related Transactions, and Director Independence	2728
Item 14 - Principal Accounting Fees and Services	2829
Part IV
Item 15 - Exhibits	2930
Signatures	2930

Page 2 of 2930

Part I

Item 1 - Business

COMPANY OVERVIEW

Medical Information Technology, Inc. (MEDITECH) was founded in 1969 to develop, manufacture, license and support computer software products for the hospital market. For ~~2018~~2019 combined product and service revenue was $~~488~~493.28 million, operating income was $64.85 million and net income was $56180.2 million. Product bookings were $~~139~~189.0 million and the resultant year-end product backlog was $~~150~~181.7 million. By year-end MEDITECH had 3,~~700~~531 staff members, and about 2,~~400~~200 active healthcare sites throughout the United States, Canada and the United Kingdom.

HEALTHCARE SOFTWARE

At the beginning MEDITECH developed a software product to automate one of the main departments in a hospital, the clinical laboratory which performs various diagnostic tests on blood or urine specimens. Within a few years, this product became standardized, thereby requiring minimal adaptation to meet the individual needs of a typical customer. MEDITECH extended the concept and developed additional software products for the rest of a hospital's clinical departments. Eventually, it moved into the financial area by developing a hospital billing and accounts receivable product as well as various general accounting products. More recently, as healthcare organizations have increased the breadth of their services, MEDITECH has expanded its offering to include software that operates in home healthcare, ambulatory, mental health and long-term care settings.

Although the individual products could be operated in a stand alone fashion, a healthcare organization achieved maximum effectiveness when they were used in an integrated mode, sharing access to the common clinical and financial records. This concept ultimately led to MEDITECH developing the so-called hospital information system, a cohesive set of software products designed from the outset to work in conjunction with the overall operation of the hospital and to minimize the need for specialized interfaces. Today MEDITECH calls this an Electronic Health Record abbreviated as an EHR.

COMPUTER HARDWARE

Sophisticated software, such as MEDITECH's, requires extensive computer and communication equipment to function. In spite of this, MEDITECH limits itself to specifying the aggregate components needed as well as suggesting typical configurations from certain hardware vendors. The responsibility is left to the healthcare organization to purchase the requisite hardware and secure a continuing source of maintenance service for it.

The hardware components traditionally consist of a set of central medium-sized computers and a large set of display terminals and printers distributed throughout the healthcare organization. All of these elements are interconnected by means of a standard high speed communication network. The computers execute the software and include large storage subsystems containing the permanent and common clinical, administrative and financial records of the healthcare organization.

Hardware technology evolves rapidly, and the current trend has been to replace the display terminals with desktop computers and mobile devices, thereby forming a client server network. In this mode of operation, the central computers become the file servers while software is executed locally on the client computer which makes file requests to the servers.

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LICENSED SOFTWARE

MEDITECH requires a healthcare customer to sign a standard software license agreement prior to product delivery, implementation and subsequent service of the software. This agreement specifies a front end product fee and a front end implementation fee, both of which are payable over the implementation process, and a monthly service fee after the site goes live. In addition to precluding ownership and restricting transfer, the license minimizes liability arising from incorrect operation of the software.

MEDITECH generally bases its product fee on a customer's net patient revenue across all of its sites, and sets its implementation fee on the total number of installations. As a result larger organizations pay more than smaller organizations. The monthly service fees are typically 1% of the product fees. A typical 150 bed acute care hospital which licenses much of our software might incur a $3,000,000 product fee, a $1,000,000 implementation fee and a $30,000 monthly service fee. An order is booked when a signed software license and a 10% deposit are received.

STAFF ORGANIZATION

MEDITECH is organized into functional units grouped around product development, sales and marketing, implementation, customer service, accounting and facility operations. MEDITECH staff work in ~~nine~~eight company owned facilities - ~~seven~~six in the greater Boston area, one in Atlanta and one in the Minneapolis area.

From its inception, MEDITECH utilized communication technology which allowed much of its business activities to be performed by remote access. MEDITECH staff sitting at their desks may access client hospitals, both personnel and computers. As a result, there is no need for remote offices. Although most customer contact is through the phone or e-mail, certain of the sales and implementation staff travel to customer sites.

PRODUCT DEVELOPMENT

Most of the product development staff is working on the incremental evolution of the current product lines, as well as the creation of new products each year. The rest of the staff is developing a set of replacement products utilizing a new software technology. Approximately every ten years, MEDITECH introduces the next generation of products based on the new software technology and gradually updates existing customers.

SALES AND MARKETING

Many of the direct sales staff, organized into regions, concentrate on new prospects. In addition, the rest of the sales staff monitor existing customers to expose them to MEDITECH's entire product line. Marketing activities and promotion are low key because healthcare organizations are easily identified, finite in number and generally send a request for proposal to vendors when they contemplate the purchase of an Electronic Health Record.

During the sales process, prospects generally visit MEDITECH to talk to product specialists and to view product demonstrations. Thereafter they are encouraged to visit various MEDITECH customer sites to observe first hand the software in actual operation and to discuss issues of concern with hospital personnel.

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IMPLEMENTATION

To ensure a successful implementation, the staff must properly train a core group of customer personnel about the operation of the software and how to use it in their daily activity. To avoid interruptions from normal activities, MEDITECH invites the customer personnel to come to its corporate offices in the Boston area for intensive training sessions.

As implementation proceeds, the staff trains the customer in the use of certain dictionaries to fit the specific need of the environment, provides interfaces to non-MEDITECH systems and assists the customer in converting data from legacy systems. In addition, MEDITECH delivers, installs and trains the customer to test the licensed software on the customer's hardware. MEDITECH utilizes remote access communication technology to minimize the need to travel.

CUSTOMER SERVICE

Once an organization goes live, the responsibility of maintaining the customer is transferred to the service staff. MEDITECH provides 24 hour a day service coverage to these customers in order to respond to problem calls. In addition, the staff updates customers with new releases of the software products as they become available. To ensure the continuing education of the staff, MEDITECH runs seminars on the use of its products.

HCA-THE HEALTHCARE COMPANY

HCA-The Healthcare Company utilizes a MEDITECH clinical information system in over 200 hospitals and has been MEDITECH's largest customer for many years. HCA represented 87% of MEDITECH revenues in ~~2018~~2019.

COMPETITION

The market for healthcare information systems is subject to the technological imperative. Accordingly, MEDITECH has a completely integrated set of application products, implements them successfully, provides ongoing maintenance including updates and continues the developmental process. MEDITECH's competitors who make similar claims include Epic, Cerner, ~~McKesson~~ and ~~CPSI~~Allscripts. In addition, there are competitors for components of MEDITECH's offerings. MEDITECH does not offer the breadth of products and services which some of the competition offers nor does some of the competition offer what MEDITECH offers. MEDITECH focuses exclusively on the healthcare information system software market and believes it competes favorably in this market.

ACCESS TO SEC FILINGS

MEDITECH's website address is "www.meditech.com" which provides access to its annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and all amendments thereof just as soon as such reports are filed with the SEC. The links so provided allow access to copies of the reports stored on MEDITECH's website, but a link is also provided to allow access to all of MEDITECH's filings stored on the SEC's website as well. One may use "http://www.sec.gov/cgi-bin/browse-edgar?CIK=1011452&action=getcompany" to access all of MEDITECH's filings stored on the SEC's website instead. In addition MEDITECH will provide paper copies of these filings free of charge to its shareholders upon request.

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Item 1A - Risk Factors

There are numerous risk factors which may affect future results of operations. The healthcare industry is highly regulated and is subject to changing economic and political influences. Federal and state legislatures could modify the healthcare system in respect to reimbursement and financing. Healthcare organizations may respond to these pressures by delaying the purchase of new information systems. Previous volatility in the market place such as that due to Y2K concerns and September 11th could reappear and cause delays. The Health Insurance Portability and Accountability Act of 1996 directly impacts the industry by specifying standards to protect the security and confidentiality of patient information. It may be possible to bring claims against software providers regarding injuries due to software or operational errors as well as breaches of security or privacy of medical or financial records. Healthcare organizations consolidating into an integrated healthcare delivery system may be able to negotiate price reductions. Finally, MEDITECH is dependent on a cohesive group of long time senior managers and staff with vast experience in the hospital industry and software technology.

Item 1B - Unresolved Staff Comments

None.

Item 2 - Properties

At year-end ~~2018~~2019 MEDITECH owned 98 facilities containing almost 1.61 million square feet of office space, all being well maintained Class A properties, 76 in the greater Boston area, 1 in Atlanta and 1 in the Minneapolis area. MEDITECH occupies 7887% of the space and the remainder is leased to various tenants. MEDITECH has adequate space for its reasonable needs in the near future.

Item 3 - Legal Proceedings

None

Item 4 - Mine Safety Disclosures

Not applicable

PART II

Item 5 - Market for Registrant's Common Equity and Related Shareholder Matters

No public trading market exists for MEDITECH's common stock, and accordingly no high and low bid information or quotations are available. The sale, assignment, transfer, pledge or other disposition of any of MEDITECH's common stock is subject to right of first refusal restrictions set forth in MEDITECH's charter. There are no shareholder agreements with MEDITECH covering the voting or repurchase of MEDITECH stock.

During ~~2018~~2019 MEDITECH did not repurchase any of its shares of common stock. However, during ~~2018~~2019 the MEDITECH Profit Sharing Trust purchased ~~106~~134,~~520~~228 shares at $4544.00 per share from existing shareholders in individual private transactions for an aggregate consideration of $45,~~793~~906,~~400~~032.

Page 6 of 2930

During ~~2018~~2019 no shares of MEDITECH common stock were offered or sold to staff members pursuant to the 2004 Stock Purchase Plan. At December 31, ~~2018~~2019, there were 1,~~898~~837 shareholders of MEDITECH's common stock and 37,190,854 shares outstanding. MEDITECH has paid quarterly cash dividends continuously since 1980 and such annual Dividends paid per share during the last five years are set forth within the table in Item 6.

Item 6 - Selected Financial Data

MEDITECH's financial statements are presented in this 10-K. Selected financial data for the past 5 years ended December 31 are as follows:

	2014	2015	2016	2017	2018
	2015	2016	2017	2018	2019
Full Year Operations:
Total revenue	$~~517~~475,~~002~~525,~~274~~581	$~~475~~462,~~525~~256,~~581~~468	$~~462~~480,~~256~~903,~~468~~895	$~~480~~488,~~903~~188,~~895~~746	$~~488~~493,~~188~~844,~~746~~632
Operating income	~~108~~67,~~931~~128,~~963~~626	6769,~~128~~891,~~626~~192	6963,~~891~~981,~~192~~134	6364,~~981~~767,~~134~~273	64,~~767~~479,~~273~~662
Net income	~~123~~70,~~508~~066,~~355~~792	7072,~~066~~890,~~792~~198	7277,~~890~~428,~~198~~576	7756,~~428~~205,~~576~~796	56180,~~205~~157,~~796~~193
Average shares	37,~~142~~167,937	37,~~167~~190,~~937~~854	37,190,854	37,190,854	37,190,854
Net income/share	$31.3388	$1.8896	$12.9608	$21.0851	$14.5184
Year End Position:
Total assets	$~~704~~652,~~640~~479,~~374~~642	$~~652~~634,~~479~~294,~~642~~572	$~~634~~619,~~294~~228,~~572~~517	$~~619~~569,~~228~~459,~~517~~952	$~~569~~669,~~459~~475,~~952~~349
Total liabilities	~~128~~114,~~313~~050,~~314~~584	~~114~~110,~~050~~759,~~584~~875	~~110~~122,~~759~~300,~~875~~267	~~122~~108,~~300~~559,~~267~~224	~~108~~111,~~559~~724,~~224~~941
Shareholder equity	~~576~~538,~~327~~429,~~060~~058	~~538~~523,~~429~~534,~~058~~697	~~523~~496,~~534~~928,~~697~~250	~~496~~460,~~928~~900,~~250~~728	~~460~~557,~~900~~750,~~728~~408
Shares outstanding	37,~~165~~190,854	37,190,854	37,190,854	37,190,854	37,190,854
Shareholder equity/share	$1514.5148	$14.4808	$1413.0836	$1312.3639	$1215.3900
Other Financial Data:
Working capital	$~~349~~341,~~807~~333,~~786~~049	$~~341~~334,~~333~~995,~~049~~263	$~~334~~301,~~995~~861,~~263~~999	$~~301~~261,~~861~~462,~~999~~548	$~~261~~419,~~462~~987,~~548~~992
Operating cash flow	7379,~~250~~245,~~910~~824	7962,~~245~~066,~~824~~105	6265,~~066~~337,~~105~~714	6590,~~337~~526,~~714~~189	9046,~~526~~634,~~189~~394
Depreciation & amortization	15,~~039~~277,~~444~~304	15,~~277~~009,~~304~~723	1514,~~009~~433,~~723~~528	14,~~433~~396,~~528~~957	1413,~~396~~344,~~957~~746
Cash dividends/share	$32.0072	$2.7248	$2.48	$2.48	$2.4824

Item 7 - Management's Discussion and Analysis of Operating Results and Financial Condition

Comparison of Fiscal Years ended December 31, 2018 and 2019:

Total revenue from both existing and new customers increased $5.6 million or 1.2% from $488.2 million in 2018 to $493.8 million in 2019. It was composed of a $9.2 million addition in service revenue due primarily to more customers becoming live, offset by a $3.5 million reduction in product revenue due to initial implementation delays.

Operating expense increased $6.0 million or 1.4% from $423.4 million in 2018 to $429.4 million in 2019 due primarily to $6.0 million more contributed to the Profit Sharing Trust. The resultant operating income decreased $0.3 million or 0.4% from $64.8 million in 2018 to $64.5 million in 2019.

Other income decreased $4.5 million due primarily to lower rental income. Gain on sale of property in 2019 of $88.9 million has no comparison to 2018. The change in unrealized securities gains was a $57.8 million increase in 2019 compared a $23.4 million decrease in 2018. Other expense decreased $1.0 million due primarily to lower rental costs. The resultant pretax income increased $166.4 million from $60.2 million in 2018 to $226.6 million in 2019.

Page 7 of 30

MEDITECH's effective tax rate increased from 6.6% in 2018 to 20.5% in 2019 due primarily to significantly higher income in proportion to credits against taxes. The resultant net income increased $124.0 million from $56.2 million in 2018 to $180.2 million in 2019.

Comparison of Fiscal Years ended December 31, 2017 and 2018:

Total revenue from both existing and new customers increased $7.3 million or 1.5% from $480.9 million in 2017 to $488.2 million in 2018. It was composed of a $10.7 million addition in product revenue due primarily to higher product bookings, offset by a $3.4 million reduction in service revenue.

Operating expense increased $6.5 million or 1.6% from $416.9 million in 2017 to $423.4 million in 2018 due primarily to higher staff related costs. The resultant operating income increased $0.8 million or 1.2% from $64.0 million in 2017 to $64.8 million in 2018.

Other income decreased $12.6 million due primarily to lower gains from the sale of marketable securities. This year includes a $23.4 million decrease in unrealized marketable securities gains. Other expense increased by $1.0 million. The resultant pretax income decreased $36.3 million or 37.6% from $96.5 million in 2017 to $60.2 million in 2018.

Page 7 of 29

MEDITECH's effective tax rate decreased from 19.8% in 2017 to 6.6% in 2018 due primarily to the reduced federal tax rate and credits changes that amount to $12.2 million associated with the Tax Cut and Jobs Act passed in December 2017. In addition, the January 1, 2018 adoption of ASU 2016-01 resulted in the current period's $5.7 million tax reduction related to the unrealized change in marketable securities gains. The resultant net income decreased $21.2 million or 27.4% from $77.4 million in 2017 to $56.2 million in 2018.

Comparison of Fiscal Years ended December 31, 2016 and 2017:

Total revenue from both existing and new customers increased $18.6 million or 4.0% from $462.3 million in 2016 to $480.9 million in 2017. It was composed of a $27.1 million addition in product revenue due primarily to higher product bookings, offset by a $8.4 million reduction in service revenue.

Operating expense increased $24.6 million or 6.3% from $392.4 million in 2016 to $416.9 million in 2017 due primarily to higher staff related costs, most of which was due to a non-recurring reduction in accrued bonus in the prior period offset by a corresponding staff salary increase in the current period. The resultant operating income decreased $5.9 million or 8.5% from $69.9 million in 2016 to $64.0 million in 2017.

Other income increased $0.6 million due primarily to additional gains from the sale of marketable securities. Other expense increased by $0.2 million. The resultant pretax income decreased $5.5 million or 5.4% from $102.0 million in 2016 to $96.5 million in 2017.

MEDITECH's effective tax rate decreased from 28.5% in 2016 to 19.8% in 2017 due primarily to the deferred tax revisions associated with the Tax Cut and Jobs Act passed in December 2017. The resultant net income increased $4.5 million or 6.2% from $72.9 million in 2016 to $77.4 million in 2017.

Financial Condition:

At December 31, ~~2018~~2019 MEDITECH's cash, cash equivalents and marketable securities totaled $~~291~~436.76 million. Marketable securities consisted of preferred and common equities. During ~~2018~~2019 cash flow from operations was $9046.56 million, cash flow from investing was $728.46 million and cash flow used in financing was $9283.23 million. The payment of $9283.23 million in dividends to shareholders was the primary use of cash generated by operating and investing activities during this period.

MEDITECH has no long-term debt. Shareholder equity at December 31, ~~2018~~2019 was $~~460~~557.97 million. During ~~2018~~2019 management expended $~~14.~~5.4 million for updated facilities as well as continued additions of computer systems for product development, sales and marketing, implementation, service and administrative staff. Management believes existing cash, cash equivalents and marketable securities together with funds generated from operations will be sufficient to meet operating and capital expense requirements for the foreseeable future.

Critical Accounting Policies and Estimates:

All of our significant accounting policies are described in the notes to the financial statements included in Item 8 of this report. We believe four of these constitute our most critical policies requiring estimates and judgments by management which are significant in terms of materiality. Reference Note 1(a) for revenue recognition, Note 2 ~~and 15~~ for marketable securities, Note 3 for doubtful account reserve and Notes 4, 8, 1213 and 1314 for income taxes.

Item 7A - Quantitative and Qualitative Disclosures About Market Risk

Market risk associated with equity securities is disclosed in Note 2 to the Financial Statements.

Page 8 of 2930

Item 8 - Financial Statements and Supplemental Data

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Medical Information Technology, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Medical Information Technology, Inc. (the "Company") as of December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, the related statements of income and comprehensive income, shareholder equity, and cash flows, for each of the three years in the period ended December 31, ~~2018~~2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2018~~2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2014.

Wolf & Company, P.C. Boston, Massachusetts January 31, ~~2019~~2020

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Balance Sheets as of December 31, ~~2016~~2017, ~~2017~~2018 and ~~2018~~2019

	Dec 31, 2016	Dec 31, 2017	Dec 31, 2018
	Dec 31, 2017	Dec 31, 2018	Dec 31, 2019
Cash and equivalents	$1417,~~089~~436,~~951~~627	$1723,~~436~~095,~~627~~977	$2314,~~095~~997,~~977~~613
Marketable securities	~~325~~306,~~878~~086,~~440~~429	~~306~~268,~~086~~638,~~429~~359	~~268~~421,~~638~~554,~~359~~499
Trade receivables, net of reserve	4150,~~574~~522,~~483~~946	5036,~~522~~760,~~946~~812	36,~~760~~575,~~812~~028
Contract assets, prepaid and other	12,~~571~~376,~~540~~569	12,~~376~~077,~~569~~935	1214,~~077~~223,~~935~~037
Current assets	~~394~~386,~~114~~422,~~414~~571	~~386~~340,~~422~~573,~~571~~083	~~340~~487,~~573~~350,~~083~~177
Computer equipment	14,~~948~~463,~~503~~275	1413,~~463~~979,~~275~~609	13,~~979~~339,~~609~~425
Furniture and fixtures	7583,~~710~~719,~~297~~079	8392,~~719~~804,~~079~~040	9276,~~804~~135,~~040~~675
Buildings	~~251~~250,~~410~~962,~~624~~956	~~250~~240,~~962~~288,~~956~~774	~~240~~190,~~288~~105,~~774~~517
Land	43,~~195~~163,~~576~~211	4340,~~163~~959,~~211~~230	4026,~~959~~717,~~230~~577
Accumulated depreciation	(~~167~~178,~~211~~192,~~794~~159)	(~~178~~175,~~192~~832,~~159~~443)	(~~175~~138,~~832~~527,~~443~~057)
Fixed assets	~~218~~214,~~053~~116,~~206~~362	~~214~~212,~~116~~199,~~362~~210	~~212~~167,~~199~~771,~~210~~137
Other assets	109,~~764~~466,~~422~~338	98,~~466~~430,~~338~~515	87,~~430~~193,~~515~~998
Deferred tax assets	119,~~362~~223,~~530~~246	98,~~223~~257,~~246~~144	87,~~257~~160,~~144~~037
Total assets	$~~634~~619,~~294~~228,~~572~~517	$~~619~~569,~~228~~459,~~517~~952	$~~569~~669,~~459~~475,~~952~~349
Accounts payable	$~~222~~227,~~615~~663	$~~227~~701,~~663~~524	$~~701~~211,~~524~~391
Taxes payable	23,~~652~~882,~~067~~391	31,~~882~~825,~~391~~528	13,~~825~~111,~~528~~878
Accrued expenses	22,~~542~~831,~~136~~337	2223,~~831~~916,~~337~~832	2324,~~916~~327,~~832~~709
Deferred revenue	3357,~~702~~619,~~333~~181	5752,~~619~~666,~~181~~651	5239,~~666~~711,~~651~~207
Current liabilities	5984,~~119~~560,~~151~~572	8479,~~560~~110,~~572~~535	7967,~~110~~362,~~535~~185
Deferred tax liabilities	3319,~~411~~154,~~551~~929	1912,~~154~~409,~~929~~407	1226,~~409~~951,~~407~~474
Tax reserves	18,~~229~~584,~~173~~766	1817,~~584~~039,~~766~~282	17,~~039~~411,282
Total liabilities	~~110~~122,~~759~~300,~~875~~267	~~122~~108,~~300~~559,~~267~~224	~~108~~111,~~559~~724,~~224~~941
Common stock, $1.00 par value, authorized
40,000,000 shares, issued and outstanding
37,190,854 shares in 2016, 2017 and 2018	37,190,854	37,190,854	37,190,854
37,190,854 shares in 2017, 2018 and 2019	37,190,854	37,190,854	37,190,854
Additional paid-in capital	122,907,959	122,907,959	122,907,959
Retained income	~~317~~289,~~019~~634,~~791~~133	~~289~~300,~~634~~801,~~133~~915	~~300~~397,~~801~~651,~~915~~595
Unrealized after-tax security gains	4647,~~416~~195,~~093~~304	~~47,195,304~~-	-
Shareholder equity	~~523~~496,~~534~~928,~~697~~250	~~496~~460,~~928~~900,~~250~~728	~~460~~557,~~900~~750,~~728~~408
Total liabilities and shareholder equity	$~~634~~619,~~294~~228,~~572~~517	$~~619~~569,~~228~~459,~~517~~952	$~~569~~669,~~459~~475,~~952~~349

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

Page 10 of 2930

Statements of Income and Comprehensive Income for the Years Ended December 31, ~~2016~~2017, ~~2017~~2018 and ~~2018~~2019

	Dec 31, 2016	Dec 31, 2017	Dec 31, 2018
	Dec 31, 2017	Dec 31, 2018	Dec 31, 2019
Product revenue	$~~127~~154,~~725~~802,~~979~~239	$~~154~~165,~~802~~487,~~239~~109	$~~165~~161,~~487~~975,~~109~~285
Service revenue	~~334~~326,~~530~~101,~~489~~656	~~326~~322,~~101~~701,~~656~~637	~~322~~331,~~701~~869,~~637~~347
Total revenue	~~462~~480,~~256~~903,~~468~~895	~~480~~488,~~903~~188,~~895~~746	~~488~~493,~~188~~844,~~746~~632
Operations, development	~~307~~328,~~959~~502,~~189~~568	~~328~~334,~~502~~612,~~568~~704	~~334~~332,~~612~~551,~~704~~702
Selling, G & A	8488,~~406~~420,~~087~~193	88,~~420~~808,~~193~~769	8896,~~808~~813,~~769~~268
Operating expense	~~392~~416,~~365~~922,~~276~~761	~~416~~423,~~922~~421,~~761~~473	~~423~~429,~~421~~364,~~473~~970
Operating income	6963,~~891~~981,~~192~~134	6364,~~981~~767,~~134~~273	64,~~767~~479,~~273~~662
Other income	38,~~045~~622,~~900~~542	3825,~~622~~980,~~542~~379	2521,~~980~~463,~~379~~262
Reduction in unrealized marketable securities gains	-	-	23,416,834
Gain on sale of property	-	-	88,948,907
Other expense	5,966,144	6,117,897	7,124,656
Change in unrealized security gains	-	(23,416,834)	57,809,294
Pretax income	101,970,948	96,485,779	60,206,162
Other expense	6,117,897	7,124,656	6,112,326
State income tax (benefit)	2,427,772	3,535,566	(387,076)
Pretax income	96,485,779	60,206,162	226,588,799
Federal income tax	26,652,978	15,521,637	4,387,442
State income tax (benefit)	3,535,566	(387,076)	7,623,403
Income tax	29,080,750	19,057,203	4,000,366
Federal income tax	15,521,637	4,387,442	38,808,203
Net income	$72,890,198	$77,428,576	$56,205,796
Income tax	19,057,203	4,000,366	46,431,606
Change in unrealized after-tax security gains	4,448,759	779,211
Net income	$77,428,576	$56,205,796	$180,157,193
Comprehensive income	$77,338,957	$78,207,787
Change in unrealized after-tax security gains	779,211
Comprehensive income	$78,207,787

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

Page 11 of 2930

Statements of Shareholder Equity for the Years Ended December 31, ~~2016~~2017, ~~2017~~2018 and ~~2018~~2019

	Common StockPaid-in capital	Retained income	OtherComprehensive	Shareholder equity
Balance, December 31, 2015	$160,098,813	$336,362,911	$41,967,334	$538,429,058
Net income		72,890,198		72,890,198
Change in unrealized after-tax security gains			4,448,759	4,448,759
Dividends paid		(92,233,318)		(92,233,318)
Balance, December 31, 2016	$160,098,813	$317,019,791	$46,416,093	$523,534,697
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, December 31, 2017	$160,098,813	$289,634,133	$47,195,304	$496,928,250
Net income		56,205,796		56,205,796
Dividends paid		(92,233,318)		(92,233,318)
Cumulative effect of account change		47,195,304	(47,195,304)
Cumulative effect of accounting change		47,195,304	(47,195,304)	-
Balance, December 31, 2018	$160,098,813	$300,801,915	-	$460,900,728
Net income		180,157,193		180,157,193
Dividends paid		(83,307,513)		(83,307,513)
Balance, December 31, 2019	$160,098,813	$397,651,595		$557,750,408

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

Page 12 of 2930

Statements of Cash Flows for the Years Ended December 31, ~~2016~~2017, ~~2017~~2018 and ~~2018~~2019

	Dec 31, 2016	Dec 31, 2017	Dec 31, 2018
	Dec 31, 2017	Dec 31, 2018	Dec 31, 2019
Net income	$7277,~~890~~428,~~198~~576	$7756,~~428~~205,~~576~~796	$56180,~~205~~157,~~796~~193
Depreciation and amortization expense	1514,~~009~~433,~~723~~528	14,~~433~~396,~~528~~957	1413,~~396~~344,~~957~~746
(Gain) loss on sale of marketable securities	(17,804,190)	(17,464,043)	272,229
Loss (gain) on sale of marketable securities	(17,464,043)	272,229	(2,945,147)
Gain on sale of fixed assets	-	(864,218)	(5,051,454)
Loss (gain) on sale of fixed assets	(864,218)	(5,051,454)	(88,416,610)
Reduction in unrealized marketable securities gains	-	-	23,416,834
Change in unrealized securities	-	23,416,834	(57,809,294)
Change in trade receivables, net of reserve	(18,~~086~~948,~~837~~463)	(813,~~948~~762,~~463)~~134	13185,~~762,134~~784
Change in contract assets, prepaid and other	1(5,~~666~~973,~~424~~753)	(5298,~~973,753)~~634	~~298~~(2,~~634~~145,102)
Change in deferred tax assets	-9,069,958	9966,~~069,958~~102	~~966~~1,~~102~~097,107
Change in accounts payable	~~(61~~5,~~845)~~048	5473,~~048~~861	~~473~~(490,~~861~~133)
Change in taxes payable	(1,~~268~~230,~~145)~~324	1(2,~~230~~056,~~324~~863)	(21,~~056~~286,~~863)~~350
Change in accrued expenses	~~(17~~289,~~238,987)~~200	~~289~~1,~~200~~085,495	1410,~~085,495~~877
Change in deferred revenue	129,~~158~~117,~~192~~378	9(4,~~117~~952,~~378~~530)	(412,~~952~~955,~~530~~444)
Change in deferred tax liabilities	(313,~~402~~341,~~665~~414)	(136,~~341~~745,~~414~~522)	(614,~~745~~542,~~522)~~067
Change in tax reserves	1355,~~204,237~~593	~~355~~(1,~~593~~545,484)	(1372,~~545,484)~~000
Net cash from operating activities	6265,~~066~~337,~~105~~714	6590,~~337~~526,~~714~~189	9046,~~526~~634,~~189~~394
Purchases of marketable securities	(3727,~~677~~705,~~167~~747)	(2711,~~705~~515,~~747~~761)	(11172,~~515~~879,~~761~~796)
Sales of marketable securities	6566,~~588~~146,~~991~~385	6625,~~146~~274,~~385~~768	2580,~~274~~718,~~768~~097
Purchases of fixed assets	(710,~~557~~375,~~283~~066)	(1014,~~375~~541,~~066~~509)	(145,~~541~~382,~~509~~609)
Sales of fixed assets	-1,867,600	18,~~867~~238,~~600~~158	8125,~~238~~163,~~158~~796
Change in other assets	~~336~~309,~~724~~108	~~309~~(89,~~108~~177)	~~(89~~955,~~177)~~267
Net cash from investing activities	2030,~~691~~242,~~265~~280	307,~~242~~366,~~280~~479	728,~~366~~574,~~479~~755
Dividends paid	(92,233,318)	(92,233,318)	(9283,~~233~~307,~~318~~513)
Net cash used in financing activities	(92,233,318)	(92,233,318)	(9283,~~233~~307,~~318~~513)
Net change in cash and equivalents	(93,~~475~~346,~~948)~~676	35,~~346~~659,~~676~~350	5(8,~~659~~098,~~350~~364)
Cash and equivalents at beginning of year	2314,~~565~~089,~~899~~951	1417,~~089~~436,~~951~~627	1723,~~436~~095,~~627~~977
Cash and equivalents at end of year	$1417,~~089~~436,~~951~~627	$1723,~~436~~095,~~627~~977	$2314,~~095~~997,~~977~~613
Supplemental Disclosure:
Cash paid for income taxes	$3122,~~578~~313,~~902~~039	$2215,~~313~~403,~~039~~260	$1529,~~403~~057,~~260~~328
Cash refunded for state income taxes	(3,998,277)	-	-
Net revenue recognition standard adjustment	(12,580,916)	-	-
Net revenue recognition standard adjustment	-	(12,580,916)	-

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

Page 13 of 2930

Notes to Financial Statements December 31, ~~2018~~2019

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, ~~2018~~2019, outstanding performance obligations amounted to $~~150~~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 $4742.9 million and $4229.90 million at December 31, ~~2017~~2018 and December 31, ~~2018~~2019 respectively. During the year a total of $2932.7 million was removed and recognized as revenue when specific events were completed. Also, Contract Assets were $95.39 million and $58.96 million at December 31, ~~2017~~2018 and December 31, ~~2018~~2019 respectively.

Page 14 of 2930

During 2017, 2018 and ~~2018~~2019, additional revenue of $9.1 million, ~~and~~ $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. ToMEDITECH's ~~date,~~ development ~~costs~~cost ~~incurred by MEDITECH~~ after technological feasibility has been established ~~have~~was ~~been~~ immaterial and ~~as such have been~~ charged to operations as incurred.

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 ~~on common stock~~.

(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.

Note 2. ~~Available~~Marketable ~~For Sale~~ Securities

MEDITECH follows the provisions of ASC ~~320-10~~321, Investments - ~~Debt and~~ Equity Securities, which requires marketable securities ~~be classified as trading, available-for-sale or held-~~to~~-maturity.~~ ~~MEDITECH~~be ~~classifies~~recorded ~~its marketable securities as available-for-sale and records them~~ at fair value. ~~The~~and ~~fair~~records ~~value~~the ~~was~~unrealized ~~determined~~change ~~based on quoted prices~~ in ~~active~~marketable ~~markets.~~securities ~~Reference~~gains ~~Note~~within 15the ~~for~~income ~~further details~~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.

Page 15 of 2930

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 ~~2016 and~~ 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.

	2016	2017	2018
	2017	2018	2019
Original cost	$~~248~~227,~~518~~405,~~286~~667	$~~227~~217,~~405~~169,~~667~~354	$~~217~~309,~~169~~435,~~354~~273
Unrealized pretax gains	7778,~~360~~907,~~154~~615	7862,~~907~~156,~~615~~967	62113,~~156~~038,~~967~~406
Unrealized pretax losses	-(226,853)	(~~226~~10,~~853~~687,962)	(10919,~~687,962~~180)
Fair value	$~~325~~306,~~878~~086,~~440~~429	$~~306~~268,~~086~~638,~~429~~359	$~~268~~421,~~638~~554,~~359~~499

Note 3. Reserve for Doubtful Accounts

The components of the reserve for doubtful accounts for the three years ended December 31 are as follows:

	2016	2017	2018
	2017	2018	2019
Reserve at beginning of year	$1,575,000	$1,~~575~~100,000	$1,100,000
Amounts charged to expense	-848,739	~~848~~44,~~739~~162	441,~~162~~143,187
Amounts written off	-(1,323,739)	(144,~~323,739~~162)	(441,~~162~~143,187)
Reserve at end of year	$1,~~575~~100,000	$1,100,000	$1,100,000

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 ~~asset~~assets and ~~liability~~liabilities for the three years ended December 31 are as follows:

	2016	2017	2018
	2017	2018	2019
Deferred tax asset	$11,362,530	$9,223,246	$8,257,144
Deferred tax assets	$9,223,246	$8,257,144	$7,160,037
Deferred tax liability	33,411,551	19,154,929	12,409,407
Deferred tax liabilities	19,154,929	12,409,407	26,951,474

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

Page 16 of 2930

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. ~~During 2018 Meditech South Africa completed payments on the mortgage note~~ MEDITECH ~~held. MEDITECH~~ believes the fair value of this investment approximates its December 31, ~~2018~~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 ~~Qualitative Testing~~. 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, ~~2018~~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:

	2016	2017	2018
	2017	2018	2019
Investments	$1,~~440~~260,~~061~~054	$1,260,054	$1,~~260~~284,~~054~~737
Mortgage notes	~~299~~130,~~600~~400	~~130,400~~-	-
Goodwill & intangibles	43,~~702~~577,533	35,~~577~~985,~~533~~033	5,~~985~~828,~~033~~565
Other	4,~~322~~498,~~228~~351	41,~~498~~185,~~351~~428	180,~~185,428~~696
Other assets	$109,~~764~~466,~~422~~338	$98,~~466~~430,~~338~~515	$87,~~430~~193,~~515~~998

Note 7. Accrued Expenses

The components of accrued expenses for the three years ended December 31 are as follows:

	2016	2017	2018
	2017	2018	2019
Accrued bonuses	$15,000,000	$15,000,000	$15,000,000
Accrued vacation	5,~~110~~115,000	5,~~115~~260,000	5,~~260~~100,000
Other	2,432,136	2,716,337	3,656,832
Accrued self insurance	-	252,136	1,039,469
Accrued expenses	$22,542,136	$22,831,337	$23,916,832
Other	2,716,337	3,404,706	3,188,240
Accrued expenses	$22,831,337	$23,916,832	$24,327,709

Page 17 of 2930

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 ~~2015~~2016 through ~~2018~~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:

	2016	2017	2018
	2017	2018	2019
Potential tax assessment	$89,~~776~~362,~~368~~662	$98,~~362~~586,~~662~~336	$811,~~586~~952,~~336~~402
Interest and penalties	9,~~452~~222,~~805~~104	98,~~222~~452,~~104~~946	85,~~452~~458,~~946~~880
Tax reserves	$18,~~229~~584,~~173~~766	$1817,~~584~~039,~~766~~282	$17,~~039~~411,282

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:

	2016	2017	2018
	2017	2018	2019
Total revenue	$~~462~~480,~~256~~903,~~468~~895	$~~480~~488,~~903~~188,~~895~~746	$~~488~~493,~~188~~844,~~746~~632
United States	88%	8887%	8788%
Canada	1011%	11%	1110%
All others	21%	12%	2%
Largest customer	7%	78%	87%

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:

	2016	2017	2018
	2017	2018	2019
Rents	$67,~~828~~012,~~374~~603	$78,~~012~~459,~~603~~277	$85,~~459~~038,~~277~~467
Dividends	13,~~395~~078,~~463~~062	1312,~~078~~004,~~062~~775	1213,~~004~~259,~~775~~412
Interest	17203,~~719~~617	~~203~~737,~~617~~103	~~737~~752,~~103~~533
Security gains (losses)	17,~~804~~464,~~344~~043	17(272,~~464,043~~229)	~~(272~~2,~~229)~~945,147
Fixed asset gains	-	864,217	5,051,453
Fixed asset gains (losses)	864,217	5,051,453	(532,297)
Other income	$38,~~045~~622,~~900~~542	$3825,~~622~~980,~~542~~379	$2521,~~980~~463,~~379~~262

Page 18 of 2930

Note 11. ~~Other Expense~~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

Page 19 of 30

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:

	2016	2017	2018
	2017	2018	2019
Rental costs	$5,~~104~~267,~~892~~922	$56,~~267~~305,~~922~~610	$65,~~305~~185,~~610~~597
Charitable contributions	~~790~~755,000	~~755~~735,000	~~735~~755,000
Other	7194,~~252~~975	9484,~~975~~046	84171,~~046~~729
Other expense	$56,~~966~~117,~~144~~897	$67,~~117~~124,~~897~~656	$76,~~124~~112,~~656~~326

Note 1213. 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:

	2016	2017	2018
	2017	2018	2019
State current	$23,~~626~~225,~~131~~483	$3443,~~225,483~~136	$~~443~~5,~~136~~626,874
State deferred	~~(198~~310,~~359)~~083	~~310~~(830,~~083~~212)	~~(830~~1,~~212)~~996,529
State income tax	$23,~~427~~535,~~772~~566	($3387,~~535,566~~076)	($~~387~~7,~~076)~~623,403
Federal current	$2920,~~857~~103,~~284~~177	$209,~~103~~336,~~177~~650	$924,~~336~~427,~~650~~084
Federal deferred	(34,~~204~~581,~~306~~540)	(4,~~581~~949,~~540~~208)	(414,~~949~~381,~~208)~~119
Federal income tax	$2615,~~652~~521,~~978~~637	$154,~~521~~387,~~637~~442	$438,~~387~~808,~~442~~203

Note 1314. Income Tax ~~Rate~~

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 ~~rate~~ for the three years ended December 31 is as follows:

	2016	2017	2018
	2017	2018	2019
Statutory U.S. income tax rate	35.0%	35.0%	21.0%
Statutory U.S. income tax	$33,770,023	$12,643,294	$47,583.648
State income taxes net of federal benefit	~~1.5%~~2,298,117	~~2.4%~~(305,790)	~~(0.~~5%),718,392
Dividend income exclusion	(3.9%)	(4.0%)	(9.6%)
Dividend income and FDII exclusion	(3,868,286)	(1,755,823)	(1,803,486)
Federal R&D tax credit	(3.4%,942,682)	(~~5.1%~~6,655,571)	(~~11.0%~~6,825,117)
Deferred tax on reduction in unrealized securities gains	-	-	9.4%
Tax code revision	(8,818,896)	-	-
Tax reserve	-	-	(2.6%)
Other	618,927	74,256	1,758,169
Tax code revision	-	(9.1%)	-
Income tax	$19.057,203	$4,000,366	$46,431,606
Other	(0.7%)	0.6%	(0.1%)
Effective tax rate	28.5%	19.8%	6.6%

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Note 1415. 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.

	2016	2017	2018
	2017	2018	2019
Net income	$7277,~~890~~428,~~198~~576	$7756,~~428~~205,~~576~~796	$56180,~~205~~157,~~796~~193
Average number of shares	37,190,854	37,190,854	37,190,854
Earnings per share	$12.9608	$21.0851	$14.5184

Note 1516. 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 2year ~~years~~ ended December 31, 2017 ~~are~~is as follows:

	2016	2017
	2017
Unrealized after-tax gains arising during the
period on securities existing at period end	$1613,~~233~~065,~~829~~056	~~$13,065,056~~
Unrealized after-tax gains arising before the
period on securities sold during the period	(1112,~~785~~285,~~071~~845)	~~(12,285,845)~~
Change in unrealized after-tax security gains	$4779,~~448,759~~211	~~$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 ~~reductions~~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 ~~reductions~~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. ~~During~~Unrealized ~~2018 the reduction in unrealized~~ marketable securities gains ofdecreased $23.4 million ~~from~~during ~~the~~2018 ~~December~~but ~~31,~~increased ~~2017 value of~~ $7857.78 million, ~~which~~during ~~represents the net unrealized gains and losses for equity securities still held at December 31, 2018, has been reported within the Income Statement~~2019.

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Note 1617. 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 ~~each~~2017 ~~the~~and ~~years 2016~~2018, ~~2017~~ and ~~2018~~$15 million in 2019.

Note 1718. 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.

Note 18. Recent Accounting Pronouncement

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 supersedes current guidance related to accounting for leases and is intended to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities in the balance sheet for operating leases with lease terms greater than twelve months. The update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) Targeted Improvements," which amends ASU 2016-02 to provide an additional (and optional) transition method to adopt the new lease standard. These ASUs will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company has evaluated the effect of this new guidance and expects this guidance to result in no material changes on our balance sheets.

Note 19. Supplemental Data

Unaudited operating results by quarter for the three years ended December 31 are as follows:

	1st Q	2nd Q	3rd Q	4th Q	2016
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	2017 Year
Total revenue	$117,926,283	$120,726,743	$111,029,496	$112,573,946	$462,256,468
Operating income	15,993,081	18,129,882	22,306,824	13,461,405	69,891,192
Net income	18,980,456	16,239,875	25,459,985	12,209,882	72,890,198
Net income per share	$0.51	$0.44	$0.68	$0.33	$1.96
	1st Q	2nd Q	3rd Q	4th Q	2017
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 Q	2nd Q	3rd Q	4th Q	2018
	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

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Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A - Controls and Procedures

Management's Annual Report On Internal Control Over Financial Reporting

An evaluation was conducted under the supervision and with the participation of MEDITECH's management, including the Chief Executive Officer and Chief Financial Officer, on the effectiveness of MEDITECH's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded MEDITECH's disclosure controls and procedures are effective at December 31, ~~2018~~2019 to ensure information requiring disclosure by MEDITECH in reports which it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

MEDITECH's management is responsible for establishing, designing and maintaining internal controls over financial reporting that provide reasonable assurance to our Board of Directors and shareholders that the financial statements prepared are fairly presented. We have set assessment criteria in accordance with the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control's Integrated Framework (2013 Framework). Based on this assessment, we believe that as of December 31, ~~2018~~2019, MEDITECH's internal control over financial reporting was effective based on said criteria.

This Annual Report on Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report on Form 10-K.

Item 9B - Other Information

None.

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PART III

Item 10 - Directors, Executive Officers and Corporate Governance

All Directors are elected each year at the Annual Meeting of Shareholders. All Officers are elected at the first meeting of the Board following the Annual Meeting of Shareholders and hold office for one year. The positions held by each Director and Officer of MEDITECH on December 31, ~~2018~~2019, are shown below. There are no family relationships among the following persons.

Director or Officer	Age	Position with MEDITECH
A. Neil Pappalardo	7677	Chairman and Director
Lawrence A. Polimeno	7778	Vice Chairman and Director
Howard Messing	6667	~~President,~~ Chief Executive Officer and Director
Barbara A. Manzolillo	6667	Treasurer, Chief Financial Officer and Director
Edward B. Roberts	8384	Director
Stuart N. Lefthes	6566	Director
Michelle I. O'Connor	5253	~~Executive Vice~~ President and Chief Operating Officer
Hoda Sayed-Friel	6061	Executive Vice President
Helen M. Waters	5455	Executive Vice President
Christopher J. Anschuetz	6667	Senior Vice President Emeritus
Steven B. Koretz	6667	Senior Vice President
Leah L. Farina	5152	Vice President
Scott M. Radner	5354	Vice President
James W. Merlin	5859	Controller and Chief Accounting Officer
Geoffrey W. Smith	5455	Vice President

The address of all Officers and Directors is in care of Medical Information Technology, Inc., MEDITECH Circle, Westwood, MA 02090. The following is a description of the business experience during the past five years of each Director and Officer.

A. Neil Pappalardo, the founder and Chairman of MEDITECH, was ~~its~~ Chief Executive Officer until 2010, and has been a Director since 1969.

Lawrence A. Polimeno has been the Vice Chairman of MEDITECH since 2002, was ~~its~~ President and Chief Operating Officer prior to that, has been a Director since 1985, and has been with MEDITECH since 1969.

Howard Messing has been the ~~President and~~ Chief Executive Officer of MEDITECH since ~~2010~~2019, was ~~its~~ President and Chief ~~Operating~~Executive Officer prior to that, has been a Director since 2011, and has been with MEDITECH since 1974.

Barbara A. Manzolillo has been athe ~~Director~~Treasurer and Chief Financial Officer since ~~2016~~1996, iswas the Treasurer ~~and~~prior ~~Chief~~to ~~Financial~~that, ~~Officer~~has been a Director since ~~1996~~2016, and has been with MEDITECH since 1975.

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Edward B. Roberts, co-founder of MEDITECH, is the David Sarnoff Professor of Management of Technology at the Sloan School of Management at the Massachusetts Institute of Technology, and has been a Director since 1969.

Stuart N. Lefthes ~~has been a Director since 2016,~~ retired as the Senior Vice President ofin ~~Sales~~2016, inhas been a Director since 2016, and had been with MEDITECH since 1983.

Michelle I. O'Connor has been the ~~Executive Vice~~ President and Chief Operating Officer since ~~2016~~2019, was Executive Vice President ofand ~~Product~~Chief ~~Development~~Operating Officer prior to that, and has been with MEDITECH since 1988.

Hoda Sayed-Friel has been ~~the~~an Executive Vice President ~~of Strategy and Client Service~~ since 2012, was ~~the~~a Vice President ~~of Marketing~~ prior to that, and has been with MEDITECH since 1986.

Helen M. Waters has been ~~the~~an Executive Vice President ~~of Sales and Marketing~~ since ~~2016~~2012, was a Vice President ~~of Customer Service~~ prior to that, and has been with MEDITECH since 1990.

Christopher J. Anschuetz has been ~~the~~a Senior Vice President ofEmeritus ~~Technology~~ since ~~2011~~2019, was a Senior Vice President prior to that, and has been with MEDITECH since 1975.

Steven B. Koretz has been ~~the~~a Senior Vice President ~~of Client Service~~ since 2012, was a Vice President prior to that, and has been with MEDITECH since 1982.

Leah L. Farina has been ~~the~~a Vice President ~~of Client Services~~ since 2010, was a Senior Manager prior to that, and has been with MEDITECH since 1989.

Scott M. Radner has been ~~the~~a Vice President ~~of Technology~~ since 2011, was a Senior Manager prior to that, and has been with MEDITECH since 1990.

James W. Merlin has been the Controller and Chief Accounting Officer since 2016, was the Controller prior to that, and has been with MEDITECH since 1986.

Geoffrey W. Smith has been ~~the~~a Vice President ~~of Product Development~~ since 2018, was a Senior Manager prior to that, and has been with MEDITECH since since 1989.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors oversees MEDITECH's business and financial activities and monitors the performance of management, but is not involved in the day-to-day operations. The Directors review MEDITECH's performance, processes and controls, key policies, legal and regulatory requirements, ethical conduct and new or unusual transactions. The Directors are actively involved in oversight of business and financial risks which could affect MEDITECH. The Board receives regular quarterly reports from Officers which cover topics such as financial, technological, regulatory and reputation risk. The Directors meet regularly with the CEO, the CFO, other Officers; read reports and other materials; and participate in Board and committee meetings. The Board consists of 6 members. During ~~2018~~2019 the Board held 4 regularly scheduled quarterly meetings and ~~all~~5 members attended all 4 meetings. Messrs. Roberts and Lefthes are "independent" as defined by the rules of the NYSE and NASDAQ.

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The Board of Directors does not have an Audit Committee. Ms. Manzolillo is a financial expert within the meaning of applicable rules under the Securities Exchange Act of 1934, as amended. The Board has selected Mr. Lefthes as its representative to meet quarterly with MEDITECH's Independent Registered Public Accounting firm to review accounting practices and advise MEDITECH's CFO.

The Board of Directors does not have a Compensation Committee. Instead, the full Board, because of its small size, carries out the duties of this Committee. The Board annually determines the total amount of the Staff Bonus and the contribution to the MEDITECH Profit Sharing Trust. Once a year the full Board meets with all the Officers to review their performance and responsibilities. The Board annually sets the compensation for each of the Officers.

The Board of Directors does not have a Nominating Committee. The Board considers a broad range of characteristics related to qualifications, background and diversity of nominees based on MEDITECH's current business needs. The Board has not adopted written guidelines regarding nominees for Director.

The Charitable Contribution Committee consists of Messrs. Pappalardo, Polimeno and Messing. This committee meets at least 6 times a year to review the criteria for the year's charitable contribution program, meets and evaluates each organization under consideration and determines the amount to be contributed to each organization for the year. During December ~~2018~~2019 the committee contributed $~~735~~755,000 to 3739 cultural, educational and social service organizations primarily within the greater Boston area.

During ~~2018~~2019 the 2 members of the Board of Directors who were not Officers of MEDITECH received a fee of $87,000 for each quarterly meeting fully attended, with such fee being deemed to also cover any special meetings, conference or committee time, and incidental expenses expended by such directors on behalf of MEDITECH.

During 2005 a Code of Ethical Conduct was created by management and adopted by the Board of Directors in an effort to outline the principles established at MEDITECH which help guide the actions of its staff, Officers and Directors. This Code sets forth ethical standards of conduct for all to follow and provides a framework for decision-making. This Code is intended to promote proper conduct at all levels of business in compliance with all applicable laws and regulations as well as to deter wrongdoing. These guiding principles are designed to propel MEDITECH forward towards future success in a continued tradition of "ingenuity delivered with integrity" in all of our business relationships. The Code of Ethical Conduct is available on MEDITECH's web site and any waiver for senior management will be disclosed there as well.

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Item 11 - Executive Compensation

There are no employment contracts providing for continued compensation in effect for any Officer of MEDITECH. MEDITECH has no Stock Award programs, no Stock Option programs and no Non-equity Incentive plans. The compensation received by MEDITECH's Chief Executive Officer, Chief Financial Officer and the three most highly compensated other Officers for the past 3 years ended December 31 is summarized in the following table. The deferred columns represent, respectively, the annual increase in the individual's balance in the MEDITECH Profit Sharing Plan and the individual's share of MEDITECH's annual contribution to this Plan.

Name and Position	Year	Salary	Bonus	Deferred	Deferred	Total
Howard Messing	~~2018~~2019	$450,000	$7,~~645~~584	$1795,~~674~~942	$98,~~179~~812	$~~484~~562,~~498~~338
President, Chief Executive	2017	432,000	7,790	52,308	3,717	495,815
Chief Executive Officer	2018	450,000	7,645	17,674	9,179	484,498
Officer and Director	2016	432,000	16,991	67,468	3,780	520,239
and Director	2017	432,000	7,790	52,308	3,717	495,815
Barbara A. Manzolillo	~~2018~~2019	$420,000	$7,~~645~~584	$1795,~~674~~942	$98,~~179~~812	$~~454~~532,~~498~~338
Treasurer, Chief Financial	2017	408,000	7,790	52,308	3,717	471,815
Chief Financial Officer,	2018	420,000	7,645	17,674	9,179	454,498
Officer and Director	2016	408,000	16,991	67,468	3,780	496,239
Treasurer and Director	2017	408,000	7,790	52,308	3,717	471,815
Michelle I. O'Connor	~~2018~~2019	$408,000	$7,~~645~~584	$1268,~~327~~982	$98,~~179~~812	$~~437~~493,~~151~~378
Executive Vice President	2017	384,000	7,790	34,486	3,717	429,993
President and Chief	2018	408,000	7,645	12,327	9,179	437,151
and Chief Operating Officer	2016	384,000	16,991	41,431	3,780	446,202
Operating Officer	2017	384,000	7,790	34,486	3,717	429,993
Helen M. Waters	~~2018~~2019	$402,000	$7,~~645~~584	$1375,~~440~~131	$98,~~179~~812	$~~432~~493,~~264~~527
Executive Vice President	~~2017~~2018	~~384~~402,000	7,~~790~~645	3713,~~616~~440	39,~~717~~179	~~433~~432,~~123~~264
Sales and Marketing	~~2016~~2017	384,000	167,~~991~~790	4537,~~213~~616	3,~~780~~717	~~449~~433,~~984~~123
Hoda Sayed-Friel	~~2018~~2019	$396,000	$7,~~645~~584	$1795,~~674~~942	$98,~~179~~812	$~~430~~508,~~498~~338
Executive Vice President	~~2017~~2018	~~384~~396,000	7,~~790~~645	5217,~~308~~674	39,~~717~~179	~~447~~430,~~815~~498
Strategy and Client Service	~~2016~~2017	384,000	167,~~991~~790	6452,~~680~~308	3,~~780~~717	~~469~~447,~~451~~815

Annual Cash Bonus: MEDITECH pays a Staff Bonus to all staff members, including Officers, in recognition of services rendered by them during each calendar year. The individual portion of the Staff Bonus payable to each recipient is determined by prorating the sum of the recipient's prior five years of cash compensation capped at $600,000.

Profit Sharing Plan: MEDITECH maintains a qualified defined contribution plan for all of MEDITECH's staff known as the Medical Information Technology, Inc. Profit Sharing Plan. All of the staff who have completed one year of service participate in the Plan. The Board of Directors sets the annual contribution, which is allocated in proportion to total compensation of all eligible members for the Plan year capped at $150,000. No allocation is allowable under this Plan to owners of 10% or more of MEDITECH's common stock. Contributions by members are not permitted. Benefits under the Plan are considered deferred compensation and become fully vested after five years of continuous service with MEDITECH. Members who have at least 20 years of service or who have incurred financial hardship may make in service withdrawals. Lump sum cash payment is made upon retirement, death, disability or termination of employment.

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Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The following table provides information as of December 31, ~~2018~~2019 with respect to the shares of common stock beneficially owned by each person known by MEDITECH to own more than 5% of MEDITECH's outstanding common stock, each Director of MEDITECH, each Executive Officer named in the Compensation Table and by all Directors and Officers of MEDITECH as a group. The number of shares beneficially owned is determined according to rules of the Securities and Exchange Commission. Under such rules, a person's beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power.

Name of	Number of Shares	Percentage
Shareholder,	of Common Stock	of Shares of
Director or Officer	Beneficially Owned	Common Stock
A. Neil Pappalardo*	16,~~577~~712,~~983~~211	44.5894%
MEDITECH Profit Sharing Trust*	6,~~662~~796,~~029~~257	1718.9127%
Ruderman Group	3,666,040	9.86%
Curtis W. Marble	1,900,000	5.11%
Grossman Group	2,061,144	5.54%
Lawrence A. Polimeno	1,~~017~~012,~~821~~621	2.7472%
Edward B. Roberts	676,879	1.82%
Howard Messing	405,000	1.09%
Barbara A. Manzolillo	195,000	0.52%
Stuart N. Lefthes	110,800	0.30%
Helen M. Waters	44,200	0.12%
Michelle I. O'Connor	35,000	0.09%
Hoda Sayed-Friel	32,100	0.08%
15 Directors and Officers as a Group*	19,~~364~~493,~~683~~711	52.0742%

*The number of shares indicated for Mr. Pappalardo includes the shares owned by the MEDITECH Profit Sharing Trust. Mr. Pappalardo is the sole Trustee of the MEDITECH Profit Sharing Trust and therefore has the power to vote its shares in addition to his own 9,915,954 shares. Likewise the number of shares indicated for the 15 Directors and Officers as a Group includes the shares owned by the MEDITECH Profit Sharing Trust.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

~~During~~Based ~~2018,~~on ~~the~~ MEDITECH ~~Profit Sharing Trust filed Forms 4 for its purchases of MEDITECH stock, but some of these filings were late. To MEDITECH~~'s knowledge, ~~based~~and ~~solely on a~~ review of ~~the~~ reports ~~given to MEDITECH~~received, all ~~other~~ Section 16(a) filing requirements applicable to its Executive Officers, its Directors, the MEDITECH Profit Sharing Trust and greater-than-10% shareholders were satisfied in ~~2018~~2019.

Item 13 - Certain Relationships and Related Transactions, and Director Independence

No additional shares of MEDITECH stock were purchased from MEDITECH by any Director or Officer in ~~2016~~2017, ~~2017~~2018 or ~~2018~~2019.

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Item 14 - Principal Accounting Fees and Services

During ~~2018~~2019, audit and non-audit services included auditing MEDITECH's financial statements, reviewing unaudited quarterly financial information, and discussing various accounting, tax, and regulatory matters. Fees paid or to be paid for such services for the three years ended December 31 are as follows:

	2016	2017	2018
	2017	2018	2019
Annual audit and quarterly reviews	$~~282~~305,~~500~~000	$~~305~~295,000	$~~295~~305,000
Audit related to Profit Sharing Trust	2324,000	24,~~000~~600	24,~~600~~750
	$305,500	$329,000	$319,600
	$329,000	$319,600	$329,750

It is the policy of the Board of Directors to approve all audit and non-audit services to be provided to MEDITECH by its Independent Registered Public Accounting Firm and the above amounts were so approved.

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PART IV

Item 15 - Exhibits

Exhibit 3.1: MEDITECH's Articles of Organization, as amended to date, is incorporated by reference to an exhibit to the quarterly report on Form 10-Q for the quarter ended March 31, 2007. Exhibit 3.2: MEDITECH's By-laws, as amended to date, is incorporated by reference to an exhibit to the annual report on Form 10-K for the year ended December 31, 2001. Exhibit 10: MEDITECH 2004 Stock Purchase Plan is incorporated by reference to the annual report on Form 10-K for the year ended December 31, 2003.

Exhibit 23: Consent of Independent Registered Public Accounting Firm, Exhibit 31: Rule 13a-14(a) Certifications, Exhibit 32: Section 1350 Certifications and Exhibit 101: Interactive Data Files are appended to this report.

There were no reports filed on Form 8-K during the quarter ended December 31, ~~2018~~2019.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Medical Information Technology, Inc.
(Registrant)

By: Howard Messing, Chief Executive Officer ~~and President~~ (Signature)

By: Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)

January 31, ~~2019~~2020 (Date)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on January 31, ~~2019~~2020.

A. Neil Pappalardo, Chairman and Director
(Signature)

Lawrence A. Polimeno, Vice Chairman and Director
(Signature)

Howard Messing, ~~President,~~ CEO and Director (Signature)

Edward B. Roberts, Director
(Signature)

Barbara A. Manzolillo, Treasurer, CFO and Director
(Signature)

Stuart N. Lefthes, Director
(Signature)

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Filing Compare · Medical Information Technology, Inc.