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Opportunities

Home Medical Care with $800K+ in Sales

CASH FLOW
$220,189

Specifications

  • Price
    $843,000

  • Revenue
    $863,242

  • Cash Flow
    $220,189

  • Equipment
    $59,973

  • Down Payment
    10%

  • Multiplier
    3.84

  • Location
    Omaha, Nebraska

  • Lease
    $1,700

  • Reason for Sale
    Moving to California

With 17 medically certified and experienced caregivers on staff, this business requires no medical background in order to own it. Begun in 2004 and serving Omaha and surrounding communities, this company’s mission is to provide professional medical assistance to patients who wish to continue living in at home. 

The 4 full-time RNs, 1 full-time LPN and several part-time caregivers provide short and long term assistance, offering skilled nursing care, pain management, dressing changes, meal assistance and more. While employees are generally scheduled between 8am and 8pm, staff is available to provide help 24/7.  However, 90% of patients are seen during the day.

This Business is a certified provider for Aetna, BCBS of Nebraska, Medicare, Medicaid, Coventry and more.  Reimbursement from insurance companies is generally between 5 and 20 days.  Roughly 90% of patients are under Medicare and Medicaid, with the rest covered by private pay and VA

The current owner is selling in order to move to California, but will provide up to one year in training and support.  While she does play a significant role in the business, a new owner would be able to pass some of that responsibility onto the office manager, who is fully trained on the seller’s duties.  Business has had consistent growth in sales over the past four years with 2016 grossing $863,242, a 13% increase from 2015 and a 24% increase from 2014.

Growth exists in expanding services into western Iowa and providing non-medical care, such as house cleaning, personal grooming and errand assistance for seniors.  Insurance companies continue to contact this business for care, but the current owner has not expanded in order to suit her needs.  Hiring and training more staff could easily capture the growing need for the services this company provides.

Business Highlights

  • Year Established: 2004
  • Location and Service Area: Omaha, Nebraska
  • Patients: Seniors, wounded victims going home, anyone needing at-home medical assistance after leaving a hospital
  • Services: skilled nursing care, dressing changes, ventilator care, daily living needs, and more
  • Patient Coverage: 75% Medicare, 15% Medicaid, 10% private pay or VA
  • Reason for Selling: Moving to California
  • Employees: 17 = 1 Office Manager, 4 FT RNs, 1 FT LPN, 11 PT CNAs; contracted work for speech, physical and occupational therapy
  • Hours: Mon – Thurs 9am – 5pm, Fri 9am – 4pm; employees generally scheduled from 8am – 8pm
  • Seller Training Period: Seller is willing to train and transition for up to 1-year post-close
  • Growth Opportunities: Expanding services into Western Iowa; offering non-medical care
  • Current Owner’s Responsibilities: Overseeing management of staff and operations

Financial Highlights

  • List Price:  $843,000
  • 2016 Gross Sales of $863,242
  • 2015 Gross Sales of $748,798
  • 2016 Cash Flow of $212,285
  • 2015 Cash Flow of $221,432
  • 24% Profit Margin in 2016
  • Assets Included in Purchase: $59,973
    • Equipment: $29,973
    • Vehicles:  $30,000
      • 2 vehicles, both 2012 Honda Civic
    • Affiliations: Nebraska Chamber of Commerce, Medicare and Medicaid certified, accredited by Joint Commission on Accreditation of Healthcare Organization
    • Certified Provider for: Aetna, BCBS of Nebraska, Centers for Medicare & Medicaid, Coventry, DHHS, Humana, League of Human Dignity, Midlands Choice, United Healthcare
    • Intangible Assets: Relationship with several providers along with all usable marketing materials and website content. 

Business Overview & Mission Statement

  • Begun in 2000 as a staffing agency providing support personnel to various medical facilities around Omaha
  • Focus changed in 2004 with the addition of home health services
    • No longer provides medical staffing
  • Provides personalized health care meeting the unique needs of the patient and family
    • Short or long term assistance
    • Care available 24/7, 365 days per year
    • Roughly 95% of business is medical care, with companionship services provided only to established clients
  • Staff licensed through State of Nebraska, Medicare & Medicaid
    • RN, LPN, CNA

“To provide the customer with health care services for whatever needs they might have while allowing them to remain in the comfort of their own home.  We exist to maintain the health and well-being of our customers.  When we adhere to this maxim everything else falls into place.  Our service will exceed our customers’ expectations.” 

Cash Flow Analysis

Description of Financial StatementP&L Statement
January - December
Tax ReturnTax ReturnTax ReturnTax ReturnNotes
20162015201420132012
GROSS SALES$863,242$748,795$655,719$593,280$568,653
% Change Over Prev. Year15.28 %14.19 %10.52 %4.33 %
Net Income Shown on Financial Statement$92,449$75,674$120,671$71,448$107,890
ADDBACKS
Compensation to Owner$48,500$45,000$54,500$53,500$39,000
Other unrelated Salaries$28,500$31,600$35,200$30,550$14,300Owner's children - Collins & Kingsley
11% Tax on total W2 Salaries$8,470$8,426$9,867$6,660$4,323
BCBS Match$9,972$10,832$6,877$0$0Owner's health insurance
Tax & IRA Contributions$3,352$8,375$9,824$9,454$6,648Owner's retirement
Depreciation$0$7,806$4,398$4,395$7,376Non-cash item
Interest$0$2,375$1,703$1,553$2,837Non-onward going expense
Non-Business Telephone$3,144$3,144$3,144$3,144$3,144Payments for personal cell phones - $262/mo
Travel$14,491$4,660$4,467$5,539$9,233Personal travel
Auto-Personal Use$4,007$5,891$21,003$8,522$7,611Personal auto
Marketing Director$0$20,185$0$0$0One-time consultant for 6 months
Rent$-600$4,126$2,699$3,767$389Rent at $1,700/mo ($20,400/year) for 1,000 sq. ft.
TOTAL ADDBACKS$119,836$152,420$153,682$127,084$94,861
Seller's Cash Flow = Total Addbacks + Net Income$212,285$228,094$274,353$198,532$202,751
Profit Margin24.59 %30.46 %41.84 %33.46 %35.65 %


  • 13% increase in gross sales between 2015 and 2016
  • 24% profit margin based on 2016 Cash Flow of $212,285
    • 2-year average profit margin of 27%

Commitment to Patients

  • We employ only highly skilled and trained professionals
  • We provide the physician/referral sources with updated patient information on need-to-know basis
  • We involve the patients’ significant others in developing an appropriate plan of care that promotes dignity, independence and meets the patients’ needs
  • We inquire about the patient’s eligibility and insurance coverage prior to admitting patients to our services
  • Our staff will make contact with the patient within 24 hours of referral or less when the situation dictates

Advantages of Home Health Care

  • Statistics tell us that overall wellbeing, healing and health is more easily accomplished and more satisfying in familiar surroundings and with the involvement of loves ones
  • Home health care is cost effective to the patient, insurance companies, state and federal government
  • Care is personalized and adapted to meet the unique needs of the patient and family
  • The continuity of care is cared on and monitored after discharge

Services

Although nursing care services are available 24/7, the majority of clients (90%) are seen during the day.

Skilled Nursing Care (24/7) Home Blood Component Therapy
Home Antibiotic Therapy Home Antiemetic Therapy (as ordered by a physician)
Home Total Parenteral Nutrition Lab Draw (as ordered by a physician)
Home Chemotherapy Physician Updates
Mediport Access Dressing Changes
Home Hydration Therapy Wound Vac Care Therapy
Home Pain Management Home Physical Therapy Services
Patient Daily ADLS/IADL Services Range of Motion Exercise
Assistance with Ambulation Assistance with Meals
Minor Meal Preparation Home Enteral Nutrition
Maternal/Child Services Ventilator Care
Home Drainage Care/Teaching Urinary Catheter Insertion/Care and Teaching
Nursing Assessments  

Seller Information

The Seller is very passionate about her business so she spends a great deal of time in it.   Seller is a licensed RN, but a buyer would not need the same medical background since the staff in place have medical training.

 

The Seller has assumed the following categories of responsibility:

 

  • Payroll
  • Employee hiring and review
  • Care plans and client file review
  • Financial management 
  • Certification compliance

 

The Seller uses the services of a CPA for tax computation/completion.  All additional financial activities (including balancing the bank accounts, paying bills, making the monthly/quarterly tax payments) are handled by her.  Utilizing a CPA or delegating this responsibility to other staff members for these activities could be considered.  Additionally, the office manager is fully trained in the seller’s areas of responsibility so a buyer need not have the same level of involvement in day to day operations.   

Affiliations

  • Nebraska Chamber of Commerce
  • Medicare Certified
  • Medicaid Certified
  • Accredited by Joint Commission on Accreditation of Healthcare Organization (JCAHO)
  • Business is credentialed by and/or a service provider for:
    • Aetna
    • Blue Cross/Blue Shield of Nebraska
    • Centers for Medicare & Medicaid Services
    • Coventry Healthcare
    • Department of Health & Human Services
    • Humana
    • Iowa Medicaid & Medicare
    • League of Human Dignity
    • Midlands Choice
    • United Healthcare

Insurance Coverage & Reimbursement

Accepts most major insurance providers, as well as Medicare, Medicaid and VA

  • Proposed care plan (which includes fees charged for services) is submitted to insurance company, Medicaid, Medicare or VA
  • Once feedback from the insurance company is received, the final care plan is formulated
    • Insurance companies and Medicaid, Medicare or VA are very detailed as to what they will cover
    • Both provider and patient are informed upfront on what is covered and services are adjusted accordingly
  • When a referral is received from an entity like the VA, provider is told how much to spend over the course of the treatment, allowing them to create a care plan utilizing available funds
  • Reimbursements are generally received from between 5 to 20 days from Medicaid, Medicare and insurance companies
  • Patient coverage:
    • Roughly 75% are Medicare
    • 15% are Medicaid
    • 10% are private pay or VA

Staff

  • Employees are generally scheduled from 8am – 8pm
  • Pay rates run from $10/hour to $18/hour, with RNs making $26/hour
  • 17 are employed -  1 office manager, 4 full-time RNs, 1 full-time LPN, 11 part-time CNAs
  • CNA training is provided
    • 4 hours is required, but current owner gives training for 12 hours
  • New employees are evaluated every 90 days from hire date, then every six months, then annually
  • Services that are contracted out include physical therapy, speech therapy, occupational therapy and respiratory therapy
    • Contracted work is paid a flat fee

Competitive Outlook & Growth

  • Location: The business is locally owned and operated, allowing for decisions to be made immediately
  • Same Day Referral Care: Due to its size, clients can receive personalized service from the same staff member on a continuing basis.  New client referrals can often be seen on the same day the referral is receive
  • Trained Staff: The fact that services are provided by trained medical personnel sets it apart from non-medical at-home care providers
  • Staff are able to care for dialysis patients and paralyzed individuals of all degrees
  • Continuity of Care: staff cares for the same patients as long as they are a patient, allowing for comfort and trust between caregiver and patient
  • The main/largest competitor for this business is the Visiting Nurse Association (“VNA”), which has locations throughout the country, including Omaha.  However, several clients have moved over from the VNA looking for a small, more personalized provider.
  • The business currently provides services to clients age 18 and older.  Including younger children would increase opportunity.  This is an untapped business opportunity.
  • Continue to build infrastructure - as the number of clients increase, additional employees could be hired
  • There will always be a need for the services this business provides, and as a majority of the population continues to age into needing such services, the demand will increase for at-home medical care
  • Offer services in Western Iowa and include non-skilled care (help with cleaning, grooming, errands)

Valuation Details

The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. 

The formula used is as follows:

2 Year Avg. 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 multiple is prescribed 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 multiple.

With this information, the computation is as follows:

  $220,189       x          3.84     =          $845,527

The Fair Market Value found above positions the business List Price at $843,000

Funding Example

Purchase Price:                       $843,000

10%Buyer Down Payment: $84,300

15%Seller Financing:             $126,450

75%Bank Loan:                      $632,250

Seller Financing 5-year term at a rate of 4% equals a monthly loan payment of $2,329

Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $9,011

After business expenses and annual loan payments of $136,073, a buyer would retain a net operating income (profit) of $84,116.  

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $843,000 with the terms listed above, the coverage ratio is 1.62.  Please note that the decision of whether to extend a loan on any particular sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.  

Purchase Price:

$843,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

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:
2-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:
2-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: %

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