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Practice Management for Healthcare Providers

Well-established relationships with 25-30 facilities!

CASH FLOW
$51,094

Specifications

  • Price
    $148,000

  • Revenue
    $416,376

  • Profit Margin
    25%

  • Location
    Omaha, NE

  • Service Area
    Mostly metro area

  • Reason for Sale
    Strategic exit planning

  • Equipment
    $75,000

  • Employees
    7; owner + 1 FT W2 employee + 5 PT 1099 employees

  • Intangible Assets
    Well-established relationships with several facilities, exponential growth opportunities, little to no competition

This healthcare management service has rock-solid relationships with 25-30 facilities! After forming contracts with long-term care facilities, this business finds providers to meet the residents’ dentistry and mental health care needs. The team of mostly contracted employees manages the health care providers’ respective practices by completing any administrative tasks needed, such as billing, credentialing, and scheduling, as well as hiring any assistants required, ordering supplies, and providing necessary equipment.

 

With no competition within the facilities, this company prides itself on providing a total care package for facility residents. For dentistry needs, the team consists of a dentist, a dental assistant, and a clinic coordinator who helps everything run smoothly by facilitating patient/doctor communication. The team’s mental health provider is an Advanced Practice Registered Nurse who practices completely independently. The current owner works the dental clinics as needed and does all the administrative work from home. A heated storage space with a sink holds the company’s equipment, sterilizer, and supplies.

 

Growth opportunities are exponential. A new owner could expand the business by adding other much-needed services such as hearing, vision, podiatry and general practice geriatrics.

Business Highlights

  • Year Established: 2011
  • Location: Omaha, NE
  • Service Area: Mostly metro area
  • Clients: Long-term care facilities
  • Services: Practice management for healthcare providers specifically in geriatric care
  • Building: Shared space w/ company in dental business; essentially a 12x12 ft. storage space for dental supplies, sterilizer, equipment, etc.
  • Reason for Selling: Strategic exit planning
  • Personnel: 7; owner + 1 FT W2 employee + 5 PT 1099 employees
  • Seller Training Period: Negotiable
  • Growth Opportunities: Add other services such as hearing, vision, podiatry, general practice geriatrics
  • Current Owner’s Responsibilities: Works clinics as needed; spends about 5 hours/week on the business

Financial Highlights

  • List Price: $153,000
  • Gross Sales:
    • 2019: $416,376
    • 2018: $466,952
    • 2017: $450,596
  • Cash Flow:
    • 2019: $51,094
    • 2018: $57,166
    • 2017: $92,426
  • Assets Included in Purchase*
    • Equipment: $74,465
    • Intangible Assets: Well-established relationships with several facilities, exponential growth opportunities, little to no competition

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnNotes
201920182017
GROSS SALES$416,375$466,952$450,596
Net Income Shown on Financial Statement$27,383$7,943$-2,169
ADDBACKS
Compensation to Owner$46,000$47,917$99,000
11% Tax on total W2 Salaries$5,060$5,271$10,890
Depreciation$0$22,368$11,160
Interest$0$216$518
Meals & Entertainment$245$77$158
Cell Phone$360$360$360
Auto-Personal Use$2,046$3,014$2,509
Replacement$-30,000$-30,000$-30,000
TOTAL ADDBACKS$23,711$49,223$94,595
Seller's Cash Flow = Total Addbacks + Net Income$51,094$57,166$92,426
Profit Margin12.27 %12.24 %20.51 %
Profit Margin: 12%

Services

  • Practice management for health care providers specializing in geriatric patients
  • Currently offering dental care and mental health

Personnel

  • 1 owner
  • 1 FT W2 employee
  • 5 PT 1099 employees

Growth Opportunities

  • Expand the business by adding other much-needed services such as hearing, vision, podiatry, and general practice geriatrics
  • Form contracts with private pay facilities

Valuation Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.

For this business, a 2019 cash flow was used with a prescribed multiple is 3.  With this information, the computation is as follows:

$103,666         x          3          =          $153,282

The fair market value found above positions the business list price at $153,000.

Funding Example

Purchase Price:                                $153,000

17.5%Buyer Down Payment:            $26,775

17.5%Seller Financing:                     $26,775

65%Bank Loan:                                  $99,450

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $499.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $1,307.

After business expenses and loan payments, a buyer with a 17.5% down payment of $26,775 would retain a profit of $29,421, which results in a 110% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $153,000 with the terms listed above, the coverage ratio is 2.36. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.