Over $1MM in Sales for In-Home Care
This home health care business focusing on OT and PT is doing over $1MM in Sales annually. With many services available, this short-term home health provider is able to address the needs of its patients with the highest quality of care. The knowledgeable, licensed, and well-trained team can provide care 24-hours a day. Working together, this group determines the necessary services for each patient. With therapists on staff (occupational, physical, and speech), as well as RNs and home health aides, patients with medical and therapeutic needs are in good hands. An additional team of home health aides is available to assist individuals with daily living needs
After receiving orders from a physician, this team can provide occupational therapy, physical therapy, speech therapy, skilled nursing, medication assistance, companion services, as well as help with social services. Services are only provided in a patient’s home or living facility.
Very active in the community, this business has a strong presence in local care facilities. They provide recreational opportunities to residents to not only build their client base, but to enrich the lives of their patients and their friends.
With an administrator managing the day-to-day operations, a new owner could take on a caseload if they are a practitioner or an oversight role.
- Year Established: 2008
- Location: Omaha
- Service Area: Omaha (8 counties), Iowa (1 county)
- Services: Speech therapy, occupational therapy, physical therapy, skilled nursing, companion services, medication aides
- Client Demographics: Post-op patients, orthopedic patients, stroke patients, seniors
- Enrollment: 100+ patients
- Building: 2,400 sq. ft.; offices, kitchen, break room, and reception – patients do not come to the office
- Reason for Selling: New ventures
- Employees: 23: OT (3), PT Assistants (3), RN (3), Home Health Aide (6), Administrator (1), admin staff (5 FT, 1PT), Speech Therapist (1)
- Hours: Office: M-F 8:30-4:30; Care: 24-hours
- Seller Training Period: 90 days transition – will assist in hiring and training replacement therapists
- Growth Opportunities: Add staff to increase capacity, expand to additional counties
- Current Owner’s Responsibilities: Two owners oversee the business and direct marketing efforts
- List Price: $1,500,000
- Gross Sales:
- 2018 $1,666,466 Annualized
- Cash Flow:
- 2018: $33,890 Annualized
- Assets Included in Purchase*
- Equipment and Inventory: $50,000: Standard FF&E, projectors, medical supplies and equipment
- Intangible Assets: Numerous positive relationships with assisted living facilities, nursing homes, health care facilities, etc.; positive customer reviews
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Jan - Oct
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$86,763||$299,060||$216,554||$401,501||$153,239|
|Compensation to Owner||$130,650||$160,800||$134,480||$120,687||$153,157|
|11% Tax on total W2 Salaries||$14,372||$17,688||$14,792||$13,276||$16,847|
|Interest||$73,230||$81,656||$1,129||$484||$4,422||Non-Onward Going Expense|
|Non-Business Telephone||$2,500||$3,000||$3,000||$3,000||$3,000||Personal Cell Phone|
|Insurance Premiums for Owners: Health, Life, Auto||$12,500||$15,000||$15,000||$15,000||$15,000|
|Meals & Entertainment||$4,061||$3,714||$1,050||$1,370||$1,518|
|Employee Benefit Plan||$4,166||$5,000||$5,000||$5,000||$5,000|
|One Time Expense||$0||$0||$189,000||$0||$0||Medical Records - $20,000, Office Supplies $19,000, Rent $30,000, Wages $120,000 for New Startup Expenses - Non-Onward Going|
|Replacement for PT||$-50,000||$-60,000||$-60,000||$-60,000||$-60,000||Hire of PT|
|Seller's Cash Flow = Total Addbacks + Net Income||$278,242||$526,212||$520,560||$501,022||$293,091|
|Profit Margin||20.04 %||28.97 %||30.33 %||30.95 %||26.90 %|
- 20% profit margin in 2017
- If you are not a physical therapist, the cash flow reflects a hire of a PT at $60,000/year
- Individuals needing short-term home health services
- Elderly individuals
- Orthopedic patients
- Stroke patients
- Patients in recovery at home after major surgeries
- Those needing home-based therapies
- Those needing companion services
- Those needing assistant with daily living needs
- Those needing medication assistance
- Speech therapy: 3%
- Occupational therapy: 27%
- Physical therapy: 45%
- Skilled nursing: 22%
- Companion services
- Medication aides
- Occupational Therapists (3)
- Physical Therapy Assistants (3)
- Director of Nursing (1)
- Registered Nurses (2)
- Licensed Practical Nurses (2)
- Home Health Aides (6)
- Administrator (1)
- Administration staff (5 FT, 1PT)
- Speech Therapist (1)
- Add staff to increase capacity
- Expand to additional counties
- Expand marketing efforts
- Increase social media engagement with caregivers or providers
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 Annualized Cash Flow was used with a prescribed multiple is 4.5. With this information, the computation is as follows:
$333,890 x 4.5 = $1,502,505
The Fair Market Value found above positions the business List Price at $1,500,000.
Purchase Price: $1,500,000
15%Buyer Down Payment: $225,000
15%Seller Financing: $225,000
70%Bank Loan: $1,050,000
Seller Financing 6-year term at a rate of 4.5% equals a monthly loan payment of $3,572.
Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $13,799.
After business expenses and loan payments, a buyer with a 15% down payment of $225,000 would retain a profit of $317,770, which results in a 141% 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 $1,500,000 with the terms listed above, the coverage ratio is 2.52.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
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Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
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Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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