DFW Home Health Agency, 15-Year Medicare-Certified Texas Provider

$4.5M

Revenue

$1.5M

SDE

5.3x

Multiple

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Full Editorial Writeup

This is a Medicare-certified home health agency in the Dallas/Fort Worth market, founded in 2011 and carrying a patient census of roughly 210. The agency delivers a full stack of skilled and unskilled services: skilled nursing, physical, occupational and speech therapy, medical social work, home health aide and personal assistance. It runs lean on hard assets, operating from about 2,000 square feet of leased office space while care is delivered in patients' homes.

The economics are attractive for a services business of this size: $4.55M in revenue converting to $1.459M in cash flow, a roughly 32 percent SDE margin, with the seller noting $1.3M+ in SDE for multiple consecutive years. The workforce is structured around 6 full-time staff and roughly 100 PRN nurses and caregivers, which keeps labor variable and tied to census. Payor relationships span both governmental (Medicare) and commercial payors.

What makes this notable is the demand backdrop. DFW is one of the fastest-growing metros in the country and the aging-in-place trend is a durable tailwind for home health. Growth has been driven almost entirely by physician referrals and word-of-mouth with essentially no formal marketing, which means the current cash flow was built with one hand tied behind the back.

Why we like it

Earnings quality is strong for the category: $1.459M SDE on $4.55M revenue is a ~32 percent margin, and the seller claims $1.3M+ SDE across multiple consecutive years. That consistency plus a diversified payor mix (Medicare plus commercial and governmental) suggests the cash flow is not resting on a single reimbursement source.
The moat is regulatory and relational: Medicare certification is a real barrier to entry, and a 15-year track record with entrenched physician referral relationships creates switching friction. A steady census of ~210 patients means the revenue rebuilds itself each period from an established referral engine rather than cold starts.
Market tailwinds are as good as they get in services: DFW is among the fastest-growing US metros and the 65-plus population is compounding nationally. Home health sits directly in the path of aging-in-place demand, which holds up in a downturn because it is medically necessary and largely third-party paid.
The operator advantage is obvious and cheap: the business has done almost no formal marketing and grown purely on word-of-mouth. A buyer who adds a discharge-planner and hospital referral program, digital marketing, and geographic expansion within DFW has clear, fundable levers to grow census without reinventing the operation.

How to improve it

Build a formal referral development function in the first 90 days by hiring or assigning a dedicated liaison to hospital discharge planners, surgical centers, skilled nursing facilities, and high-volume physician practices. This is the single biggest gap and the most direct path to census growth given the agency has relied entirely on inbound word-of-mouth.
Optimize payor mix by pursuing additional commercial and Medicare Advantage contracts, which typically carry different (often better) episodic economics than traditional Medicare. Model the reimbursement per episode by payor and steer intake toward the highest-margin mix without compromising care access.
Stand up basic digital infrastructure: a modern website, Google Business Profile, and targeted local search for caregiver recruitment and family-driven referrals. Given the PRN-heavy staffing model, a recruiting funnel is as valuable as a patient funnel because caregiver capacity is the constraint on census growth.
Tighten clinical documentation and coding to protect against reimbursement risk under the PDGM (Patient-Driven Groupings Model). Ensuring OASIS accuracy and reducing LUPA (low-utilization payment adjustment) episodes can lift revenue per patient meaningfully with no new patients.
Expand the service geography within DFW by mapping current patient density and identifying adjacent zip codes with high 65-plus growth but thin competitor coverage. The office is not a traffic driver, so expansion is a marketing and staffing exercise, not a real estate one.
Renegotiate or extend the office lease well ahead of the 12/31/2026 expiration to remove a diligence overhang and lock in fixed cost. With only 2,000 square feet at stake this is low-risk but worth resolving early so it does not distract from growth.

Diligence notes

Scrutinize the payor concentration and reimbursement trend line: pull the revenue split by Medicare, Medicaid, and commercial payors, and stress-test against known PDGM rate pressure and future CMS home health rate proposals. A high Medicare concentration means the whole model is exposed to federal rate decisions outside the buyer's control.
Verify the $1.459M SDE with full add-back detail and confirm the $1.3M+ multi-year consistency claim against tax returns and P&Ls. Home health SDE can be inflated by owner-provided clinical hours or under-accrued caregiver costs, so reconcile the PRN labor spend against census to confirm margin durability.
Confirm the durability and concentration of referral sources, since 100 percent of growth has come from physician referrals and word-of-mouth. If a small number of referring physicians or a single facility drives the census, that is a material customer-concentration risk that survives the sale only if relationships transfer.
Review regulatory standing in detail: Medicare certification status, survey history, ADRs (additional documentation requests), any recoupment or audit exposure, and the state license transfer process on a change of ownership. A CHOW (change of ownership) in Medicare home health can trigger review and timing risk that affects cash flow during transition.
Assess the 30-day transition offer against the reality that the owner may hold key referral relationships personally. Given the reason for selling is pursuing other opportunities rather than retirement, negotiate a longer consulting tail or earnout tied to census retention to protect against referral runoff post-close.
Evaluate caregiver staffing stability, given 100 PRN caregivers are the operational backbone. Confirm turnover rates, wage competitiveness, and whether the agency can staff incremental census, because in home health the binding constraint on growth is frequently caregiver supply, not patient demand.

Source

Originally listed on BizBuySell. View original listing →