245D Home Health Care Agency, 13-Year Twin Cities Provider

$5.9M

Revenue

$1.3M

SDE

3.9x

Multiple

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Full Editorial Writeup

This is a Minnesota home and community-based care agency operating under the state's 245D program, serving the Minneapolis/St. Paul metro since 2012. The business delivers personal care assistance (PCA) services to clients in their homes, generating roughly $5.9M in annual revenue with $1.3M in owner cash flow. It runs with 165 employees (40 full-time and 125 part-time caregivers), no physical facility, and outsourced billing and payroll, which keeps overhead low and administrative burden minimal.

What sets this operation apart is its regulatory positioning. Minnesota's Department of Human Services halted new provider applications over two years ago, effectively freezing the competitive set. The agency has already completed revalidation through a full compliance and training audit, and has navigated the program transition scheduled for October 1, 2026, which is expected to eliminate roughly 25% of current providers. That combination of a moratorium plus a purge of weaker operators creates a scarcity dynamic that should push clients toward compliant, well-run agencies like this one.

The business is described as absentee-owned with excellent staff in place, EVV (electronic visit verification) implemented since inception, and PCA training handled through a Star Services partnership. The owner is retiring to focus on other companies and is offering seller financing plus help sourcing bolt-on acquisitions through an established provider network. Reimbursement here is overwhelmingly government-funded (Medicaid waiver dollars), which is both the durability and the risk of the model.

Why we like it

Earnings quality is strong on paper: $1.3M SDE on $5.9M revenue is a ~22% margin in a services business, and the cost structure is genuinely light with no real estate and outsourced billing and payroll. The caveat is that this is Medicaid waiver revenue, so margin durability depends entirely on reimbursement rates holding, which diligence must confirm.
The moat is regulatory and rare. Minnesota stopped accepting new 245D provider applications over two years ago, so a buyer inherits a license that literally cannot be recreated by a new entrant. That scarcity is the single most valuable asset in this deal and is worth more than the SDE multiple suggests.
Market tailwinds are real and demographic. An aging Twin Cities population is expanding demand while the October 2026 program transition is projected to eliminate roughly 25% of providers, meaning displaced clients need a new home with a compliant agency. Being already revalidated positions this business to absorb that overflow.
The operator advantage is that this is a compliance-first, systems-driven operation that has already cleared the audit and transition hurdles that will sink weaker competitors. EVV since inception and outsourced billing since 2012 reduce fraud exposure, which is the number one thing that gets home care agencies shut down.

How to improve it

Immediately verify and shore up the compliance backbone. Within 90 days, confirm the revalidation status, EVV data integrity, and clean billing history in writing, then formalize a compliance calendar so the license that makes this business valuable never lapses under new ownership.
Build a client intake and referral engine to capture the displaced clients from the 2026 provider purge. Establish relationships with case managers, discharge planners, and county lead agencies now so that when 25% of providers exit, this agency is first on the referral list.
Address the absentee-owner risk by installing or promoting a strong operating manager with clear authority and documented SOPs. The listing calls this absentee-run, which is attractive, but a buyer must confirm who actually holds the licensure and compliance responsibility day to day.
Attack caregiver recruitment and retention, since 125 part-time PCAs is both the growth constraint and the churn risk. Improve wages, scheduling flexibility, and referral bonuses to expand billable hours, because in home care the binding constraint on revenue is staffed hours, not client demand.
Pursue the bolt-on acquisition path the seller offered to help with. Because new 245D licenses cannot be obtained, buying existing agencies is the only way to grow the licensed footprint, so use the seller's provider network to build an acquisition pipeline before he exits.
Diversify revenue concentration where possible by broadening service lines within the 245D framework and layering in any private-pay or additional waiver programs the license permits. Reducing dependence on a single reimbursement stream protects margin against rate changes.

Diligence notes

Confirm exactly what the '245D program transition effective October 1, 2026' means for reimbursement rates, billing codes, and service definitions. This is the central swing factor in the deal, and a buyer needs the actual DHS guidance in hand, not the seller's optimistic summary of it.
Verify the revenue and SDE against payroll registers, Medicaid remittance advices, and tax returns. Home care SDE is highly sensitive to how caregiver hours, overtime, and owner add-backs are treated, so reconstruct the $1.3M cash flow line by line and confirm it is genuinely absentee-achievable.
Audit the licensure, revalidation documentation, and any history of DHS investigations, corrective action plans, or clawbacks. In home care, a single fraud or documentation finding can suspend billing entirely, so pull the full regulatory file and confirm the license transfers cleanly to a new owner.
Examine caregiver and client concentration and stability. Review turnover among the 165 employees, whether key staff will stay post-sale, client retention and average length of service, and how many clients are tied to specific caregivers who could leave and take business with them.
Stress-test the 'absentee' claim by identifying who holds the compliance and management functions today. If the owner is more involved than stated, or if a key manager is planning to leave, the low-involvement thesis and the multiple both need to be repriced.

Source

Originally listed on BizBuySell. View original listing →