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Opportunities

MO Non-Emergency Medical Transportation

CASH FLOW
$113,830

Specifications

  • Price
    $400,000

  • Cash Flow
    $113,830

  • Revenue
    $696,819

  • Location
    Central Missouri

  • Intangible Assets
    Word-of-mouth advertising, reputation

  • Service Area
    8 counties in Central Missouri

  • Employees
    Office Manager, 10 drivers (all 1099 contractors)

  • Down Payment
    15%

  • Equipment
    $11,400

Every non-emergency medical transportation driver is a 1099 contracted team member who utilize and maintain their own vehicles.  The owner has an office manager for day-to-day operations and often works remotely.  With 9 years of established operations in 8 counties, this company is poised for expansion in the central Missouri area. 

Customers receive transportation to medical appointments and beneficial standing relationships with Missouri Medicaid and senior living facilities account for a majority of consumers.  The 12 drivers average over 600 round trips per month. 

Currently, the company contracts with 12 drivers who utilize their personal vehicles. There is one company-owned vehicle included in the sale that is currently leased to one contracted driver. 

An area for potential growth is including the use of wheelchair accessible vehicles, either owned by the company or a contracted driver.   Grants are available to those interested in purchasing accessible vehicles.   Expansion areas include building relationships with additional care providers, the extension of services for everyday errands, shopping trips, or trips to the airport, as well as increasing the hours of operation.

Business Highlights

  • Years in Business: 11
  • Location: Central Missouri – serving 8 counties
  • Trips: 4th quarter of 2017 has averaged over 730 round trips
  • Clients: Approved carrier/provider with Missouri Medicaid; a senior agency in several counties; low income clinics; established relationships with several nursing homes and assisted living centers, as well as other private contracts
  • Employees: Office Manager (salaried), 1 Support Staff (salaried), 12 drivers (all 1099 contractors) using their own vehicles
  • Office Hours: Mon – Fri 8am to 5pm
  • Service Hours: 5am – 8pm
  • Seller Training Period: 90 days, or negotiable
  • Growth Opportunities: Add additional services (i.e., errands, appointments, shopping trips, etc.); wheelchair accessibility; expand service area and hours; develop more relationships with nursing homes and /senior living centers
  • Current Owner’s Responsibilities: The seller depends on the office manager for day-to-day operations.  She has oversight, but is mobile and can check in from anywhere, even the beach!  Owner’s husband is currently the one paid support staff, helping in the office and driving as a backup driver as needed.

Financial Highlights

  • List Price: $400,000
  • Gross Sales:
    • 2018: $696,819
    • 2017: $646,598
    • 2016: $508,608
    • 2015: $439,716
  • Cash Flow:
    • 2018: $113,830
  • Assets Included in Purchase: $11,400
    • Equipment: Desktop computers & monitors, printer, new server and more
    • Vehicles:  2009 Ford vehicle – currently leased to one of the drivers
    • Intangible Assets: Word-of-mouth advertising, reputation

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnTax ReturnTax ReturnNotes
201820172016201520142014
GROSS SALES$696,819$646,598$508,608$439,716$422,768$422,768
Net Income Shown on Financial Statement$34,645$80,968$44,927$32,383$37,939$37,939
ADDBACKS
Compensation to Owner$43,200$37,750$26,500$14,200$17,600$17,600
Tax on total W2 Salaries$4,752$4,153$2,915$1,562$1,936$1,936
Depreciation$2,005$5,924$5,233$3,203$25$25Non-cash item
Interest$0$2,330$1,956$499$0$0Non-onward going expense
Non-Business Telephone$2,800$2,800$2,800$2,800$2,800$2,800Personal expenses
Insurance Premiums for Owner$8,722$8,722$8,722$8,722$8,722$8,722Health and life insurance premiums
Auto$7,706$0$0$0$0$0
Fuel$10,000$0$0$0$0$0
TOTAL ADDBACKS$79,185$61,679$48,126$30,986$31,083$31,083
Seller's Cash Flow = Total Addbacks + Net Income$113,830$142,647$93,053$63,369$69,022$69,022
Profit Margin16.34 %22.06 %18.30 %14.41 %16.32 %16.32 %

 

Services

Non-emergency medical transportation (NEMT). Trips can be scheduled through health plans or privately.

  • Doctor/dental appointments
  • Labs
  • Surgery
  • Sleep studies
  • Trips can be scheduled through health plans or privately
  • Dialysis
  • Chemotherapy & radiation
  • Wound care

Dialysis, chemo and wound care customers are recurrent during a weekly period.

  • Dialysis – 3 days/week
  • Chemotherapy & radiation – up to 5 days/week
  • Wound care – multiple/varying

While the majority of business is for NEMT services, the company does have a working relationship with a senior agency to provide transport services for daily living tasks. Currently across 5 counties, this company helps seniors with:

  • Shopping trips
    • Grocery stores, pharmacies and more
  • Transportation to train or bus stations and airports
  • Specialty trips
    • Beauty/barber shop, bank, visits to hospitals or nursing homes and more

Customers not using transport services through a health plan may privately pay in advance or on the day of the trip.

Employees

  • Office Manager
    • Salaried
    • Handles day-to-day office operations
    • Dispatcher; manages daily office operations
  • Support Staff (1)
    • Salaried
    • Assists Office Manager and General Manager with daily tasks
  • Drivers
    • Currently there are 12 drivers, all 1099 contractors
    • Paid a flat rate per mile
    • Drivers use their own vehicles for transportation
      • Insurance coverage is through the company
    • Several of the drivers have been with the company for 4+ years

Seller manages A/R, A/P, payroll, contracts, credentialing, insurance and hiring of employees/drivers.

Growth Opportunities

  • Add additional services
    • A majority of clients are seeking transportation to and from medical appointments, but the availability of services to non-medical appointments is a great potential revenue stream
    • Work with adults who have a disability
  • Wheelchair accessibility
    • Currently, none of the company or employee vehicles are wheelchair accessible
    • Offering this capability would put the company on par with competitors that do have wheelchair accessibility
  • Expand territory
    • Currently serving 8 counties
    • Growing into adjacent counties will increase visibility and profits
    • A buyer would need to seek out drivers in these areas
  • Expand hours
    • Adding daily living services would call for extra hours in the evening or early morning
  • Seek new contracts
    • Multi-location clinics would be a good option to work with, and the company could become a preferred option for customers
    • Developing relationships with more senior living facilities

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:

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.

For this business, a 2018 cash flow was used with a prescribed multiple is 3.52.  With this information, the computation is as follows:

$113,830         x          3.52     =          $400,681

The fair market value found above positions the business list price at $400,000.

Funding Example

Purchase Price:                       $400,000

15% Buyer Down Payment:     $60,000

15% Seller Financing:               $60,000

70% Bank Loan:                      $280,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,119.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $3,680.

After business expenses and loan payments, a buyer with a 15% down payment of $60,000 would retain a profit of $56,252, which results in a 94% 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 $400,000 with the terms listed above, the coverage ratio is 1.98. 

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. 

Purchase Price:

$400,000

$
%
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:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 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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