Opportunities
Occupational Medicine Clinic in Northern Indiana – No Hospital Affiliation
Preferred clinic for companies in the area!
Specifications
This triple-location occupational medicine practice in Elkhart, Indiana is the preferred clinic for companies in the area! Services include work-related injuries, DOT physicals, and COVID rapid testing. Established for nearly 15 years, this clinic is independently owned with no hospital affiliation, making them highly desirable to companies large and small in every industry. Offering workers’ compensation healthcare for on-the-job injuries and chronic conditions, as well as COVID rapid testing, this team has staff on duty 24/7 at two of their three locations.
- Currently doing 100-150 Covid rapid tests a day
- Have overnight hours which is an invaluable asset, as companies save a tremendous amount of money on Emergency Room expenses, making these locations the go-to clinics for injured workers.
- Elkhart is known as the “RV Capital of the World,” so there is also an incredibly high demand for DOT Physicals in this region, as 60%-80% of all RV’s globally are manufactured there; drivers of the RV transportation vehicles are required to carry a DOT medical certificate.
- Competitive advantage because they bill companies at least 3 times less than hospitals or hospital-affiliated clinics.
Staff includes the owner, who is the Supervising Physician, along with 1 FT Nurse Practitioner, 3 PT Nurse Practitioners, 1 Practice Manager, 1 Office Manager, 9 Medical Assistants, 2 Rad Techs, plus an independent contractor used for marketing. The Practice Manager and Office Manager both help with the day-to-day responsibilities of the business.
There are over 100,000 corporations in the area. Having a plan in place to broadly advertise the new third location has the potential to quadruple their revenue, as they will be the sole provider during the overnight hours in the county. A new owner could certainly bring in more revenue by continuing to publicize the fact that this clinic will bill companies at least 3 times less than hospitals or hospital-affiliated clinics. Priced at $4,250,000, a down payment of $531,250 returns $606,451 in the first year after debt payments – a 114% return on investment!
Business Highlights
Year Established: 2007
Location and Service Area: 3 locations in Northern Indiana
Services: Treating occupational injuries, DOT physicals, COVID rapid testing, drug screening, employment prescreening
Clients: Businesses & Corporations in all industries in the region
Leases: Location 1: 3,500 sq. ft.; Location 2: 2,000 sq. ft.; Location 3: 3,000 sq. ft. (rent-free for 2 years)
Reason for Selling: Approaching retirement
Personnel: 18: 1 Owner + 1 FT Nurse Practitioner, 3 PT Nurse Practitioners, 1 Practice Manager, 1 Office Manager, 9 Medical Assistants, 2 Rad Techs, plus 1 independent contractor for marketing purposes
Seller Training Period: 6 months
Intangible Assets: Little to no competition in the area, well-known to companies in every industry, not hospital affiliated
Growth Opportunities: Increase awareness in the region of 24/7 business hours, as there is no competition for the overnight hours
Current Owner’s Responsibilities: Supervising PhysicianTHE TEAM- EMPLOYEES
- 1 Owner
- Supervising Physician – only active when it comes to being a provider
- 1 Practice Manager + 1 Office Manager
- Both handle day-to-day responsibilities of the busienss
- 1 FT Nurse Practitioner
- 3 PT Nurse Practitioners
- 9 Medical Assistants
- 2 Rad Techs
- 1 Independent Contractor for marketing
THE TEAM- OWNER & TRANSITION
- The owner is the Supervising Physician and is approaching retirement age
- He will stay on for 6-12 months to assist in the transition
- The owner currently works 30-40 hours/week
Financial Highlights
- List Price: $4,250,000
- Gross Sales
- 2020: $2,192,069 Annualized
- 2019: $2,026,014
- 2018: $2,652,151
Cash Flow
2020: $1,228,534 Annualized
2019: $1,032,506
Assets Included in Purchase: $357,336
- Equipment: $300,361: X-ray machines, medical equipment, furniture, fixtures, office equipment
- Business Vehicles: $56,975
- Software: EMR software developed by the owner & 5 programmers. This would be included in the sale and would save a new owner a significant amount of money, as EMR software is a necessity to run the business, and costs approximately $3,500/month to rent.
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-Oct 2020 | Tax Return Cash | Tax Return Cash | Tax Return Cash | Tax Return Cash | Notes |
| 2020 | 2019 | 2018 | 2017 | 2016 | ||
| GROSS SALES | $1,826,724 | $2,026,014 | $2,652,151 | $1,512,196 | $2,390,751 | |
| Annualized | $2,192,069 | |||||
| Net Income Shown on Financial Statement | $499,178 | $405,499 | $841,099 | $561,416 | $880,740 | |
| ADDBACKS | ||||||
| Compensation to Owner | $508,257 | $335,000 | $335,000 | $60,000 | $335,000 | |
| 11% Tax on total W2 Salaries | $55,908 | $36,850 | $36,850 | $6,600 | $36,850 | |
| Depreciation | $2,060 | $4,538 | $25,802 | $5,787 | $8,054 | |
| Interest | $0 | $4,425 | $5,071 | $4,601 | $5,437 | |
| Rent Adjustment | $29,166 | $35,000 | $35,000 | $35,000 | $35,000 | Just ended $35k/year lease |
| Replacement Salary | $-75,000 | $-90,000 | $-90,000 | $-90,000 | $-90,000 | To replace/retain owner |
| Meals/Entertainment | $4,210 | $1,194 | $0 | $0 | $0 | |
| Compensation to owner | $0 | $300,000 | $0 | $0 | $0 | CPA to prove during due dilligence |
| TOTAL ADDBACKS | $524,601 | $627,007 | $347,723 | $21,988 | $330,341 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $1,023,779 | $1,032,506 | $1,188,822 | $583,404 | $1,211,081 | |
| Annualized | ||||||
| Profit Margin | 56.04 % | 50.96 % | 44.82 % | 38.58 % | 50.65 % |
- The year-over-year fluctuation in revenue was due to the way A/R is received in the business.
- With a few billing glitches, they experienced a variance in collections.
- They also had a small amount of turnover in their billing department which created backlog that has since been resolved.
Valuation
The Firm Advisors used a cash flow valuation methodology to determine the purchase price of the business.
Cash flow is the sum of business net income plus any owner perks and any non-onward expenses. Then we prescribe a multiple based on 20 parameter which valuate the health of the business. For this valuation, we used the 3-year average cash flow value making the business price much more favorable to the buyer.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$1,149,954 x 3.7 = $4,254,830
Funding Example
Purchase Price: $4,250,000
| 12.5%Buyer Down Payment | $531,250 | Must be unborrowed funds |
| 12.5%Seller Financing or Equity | $531,250 | 5-year term at a rate of 4.50% = a monthly loan payment of $9,904 |
| 75%Bank Loan | $3,187,500 | 10-year term at a rate of 6% = a monthly loan payment of $35,388 |
- Cash Flow: $1,149,954
- Annual Payment:
- To Seller: $118,849
- To Bank: $424,653
- Net Profit (after expenses and loan payment): $606,451
Funding Details
Business:
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 3-year average cash flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 3-year average cash flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
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