The Mazzoni Center expects to see an operating profit for the first time since 2020

Mazzoni Center, the Philadelphia region’s largest LGBTQ health agency, expects to report a small operating profit for the year that ended June 30, the nonprofit’s chief executive said.

That would be the first annual gain since fiscal 2020 at Mazzoni, which had endured financial and management turmoil since at least 2017, and is now working to stabilize operations.

“We feel like we’re seeing some real green shoots of progress on the financial side,” new chief executive Simon Trowell said in an interview last week, after the organization released its audited financial statements for fiscal 2024.

Trowell, a former board member, attributed the progress to revenue gains from two federal programs that are new for Mazzoni, solid gains in patient volumes, and efforts to keep expenses in check.

He did not provide specific information on fiscal 2025 results, but said the audit should be available early next year.

The organization still has a heavy debt load and needs to rebuild its finances at a challenging time in healthcare because of rapidly rising expenses. The fiscal 2024 financial report still had a warning from auditors about Mazzoni’s precarious financial situation.

It’s also possible that some of Mazzoni’s patients will lose health insurance starting next year under policy changes by the administration of President Donald Trump. The expiration of enhanced tax credits for plans purchased on Pennie, the Pennsylvania Obamacare market, is expected to make health insurance unaffordable for many next year. Medicaid work requirements starting in 2027 are expected to result in significant coverage losses.

Mazzoni announced Trowell’s appointment as CEO in August. Trowell had joined the Mazzoni board in January 2024. His background is in the pharmaceutical industry, including 27 years at GSK in the Philadelphia region.

The board tapped Trowell as interim CEO after Sultan Shakir departed in March after three years in the job. Shakir initiated many of the changes at Mazzoni that are starting to pay off financially.

Also relatively new to Mazzoni’s executive leadership is chief financial officer Dan Clemons, who previously worked as CFO of Philadelphia Fight, a community health nonprofit. Before that, he served as CFO of two federally qualified health centers in Connecticut.

Clemons joined Mazzoni a year ago after his predecessor was dismissed for taking cash advances totaling $714,385 without proper approvals to make payroll in September 2024.

The agreements required Mazzoni to pay back just over $1 million, which amounts to an interest rate of more than 40%. In May, Mazzoni settled disputes with the companies that provided that money, according the fiscal 2024 audit, but did not disclose details.

The fiscal 2024 audit showed a $2.1 million operating loss, down from a $5.1 million loss in the year that ended June 30, 2023. Total revenue rose 26% to $15.8 million from $12.5 million.

Trowell and Clemons attributed the revenue gain to Mazzoni’s certification as a type of federally qualified health center that gives it better Medicare and Medicaid rates.

Being a so-called FQHC look-alike also enabled Mazzoni to broaden its participation in a federal program that allows it to buy certain drugs at a discount while getting reimbursed for the full price from insurance companies.

Those benefits fully took effect in March 2024, Clemons said. That meant they were in place for only three full months of that fiscal year.

Additional changes that have helped increase revenue include reducing wait times for new patients, Trowell said. The organization is rebuilding its behavioral health program and expects to have the equivalent of nine full-time therapists as of Dec. 1.

The focus is on patients who already get their clinical care from Mazzoni and have Medicare or Medicaid insurance — “folks who really struggle to get behavioral healthcare,” he said.

On the expense side, Trowell noted that Mazzoni laid off around 10 people late last year. The nonprofit now employs 128, he said.

A major focus is paying down debt. For example, Mazzoni built up a significant debt to Cencora, a West Conshohocken drug distributor that is one of its biggest suppliers of drugs in the 340(b) program.

That short-term Cencora debt was paid off over the summer, Clemons said. “That’s how we’re going to get ourselves into a better financial situation and get everyone more comfortable with where we’re at,” he said.