East Texas Gastroenterology Practice & ASC, 1992-Founded with Real Estate

$4.6M

Revenue

$2.7M

SDE

3.7x

Multiple

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Full Editorial Writeup

This is a combined gastroenterology practice founded in 1992 and its co-located Medicare-certified ambulatory surgery center added in 2006, both housed in a purpose-built, ASC-grade building in the medical district of a rural East Texas community. The business runs two revenue lines from the same physicians in the same building: professional fees through the clinic and facility fees through the ASC. Combined revenue held between $4.6M and $5.0M across 2023, 2024, and 2025 per filed federal returns, with ASC facility revenue hitting an all-time high in 2025 and first-half 2026 running stronger still.

The strategic prize here is scarcity. This is the only ambulatory-surgery-based GI provider across a wide, multi-county rural catchment, making it the default destination for GI referrals reinforced by entrenched hospital relationships built over decades. There is no website and no marketing spend because referrals arrive on their own. Everything conveys debt-free, including real estate owned free and clear for more than twenty years, valued at $0.9M to $1.5M by a broker's opinion.

The economics are unusually clean and traceable. Adjusted EBITDA before physician compensation ran $2.85M to $3.3M annually over 2022 through 2025, with the stated $2.35M EBITDA reflecting $700,000 of physician replacement pay and the $2.7M SDE stated before compensation to one working physician owner. Payer mix is roughly 59% commercial, 25% traditional Medicare, and minimal self-pay with zero Medicaid, though commercial rates have not been renegotiated in over ten years. The deal is SBA 7(a) eligible with a lender pre-approval letter already on file.

Why we like it

Earnings quality is exceptional and fully documented. Adjusted EBITDA before physician comp ran $2.85M to $3.3M for four straight years, every figure traces to filed federal returns, and the CIM lays out each compensation scenario line by line. Revenue has been remarkably stable at $4.6M to $5.0M across 2023 through 2025, which is the kind of consistency buyers rarely see at this size.
The moat is real and economically defensible. This is the only ambulatory-surgery-based GI provider in a wide rural catchment, and the barrier to entry is not regulatory (Texas requires no Certificate of Need) but capital plus the near-impossibility of recruiting gastroenterologists to non-metro East Texas. Entrenched hospital referral relationships and no marketing spend mean patients arrive by default.
Demand is genuinely durable and demographic. GI procedures like colonoscopies and endoscopies are non-discretionary and driven by an aging population that keeps needing care regardless of the economy. With no Medicaid exposure and 59% commercial payer mix, the revenue base is both essential and well-reimbursed.
The dual-revenue structure captures both professional and facility fees from the same physicians in the same building. Owning the ASC means you keep the facility fee that would otherwise flow to a hospital, and ASC facility revenue hit an all-time high in 2025 with 2026 running stronger. That vertical integration is the single biggest driver of the margin profile.
The balance sheet and deal structure are unusually clean. Everything conveys debt-free with no notes, no equipment leases, and no lines of credit, and the real estate has been owned free and clear for over twenty years. SBA 7(a) eligibility with a pre-approval letter already on file de-risks the financing path materially.

How to improve it

Renegotiate commercial payer contracts, which have not been touched in more than ten years. In a market where you are the only GI ASC for miles, you hold real leverage, and even modest rate uplifts flow almost entirely to the bottom line given the fixed cost base. This is the fastest path to expanding EBITDA without touching volume.
Recruit the associate gastroenterologist that the continuing physician is prepared to onboard. Adding a second producing physician grows both professional and facility fee lines using existing infrastructure and staff, and it directly de-risks the key-person concentration that defines this practice. Physician recruiting is the constraint here, so start the search immediately post-close.
Build a basic referral and community presence given there is currently no website and zero marketing spend. Even a modest digital footprint and structured outreach to primary care referrers across surrounding counties can capture procedure volume that currently leaks to distant metros. This is upside available at negligible cost.
Push ASC procedure mix and add adjacent service lines that fit an endoscopy suite. Bringing more cases in-house or expanding hours and block time increases facility fee capture on already-owned assets. Study whether under-utilized capacity in the 8,400 square foot facility can absorb incremental volume.
Formalize the MSO structure early so a non-physician buyer retains flexibility and control. Texas bars non-physicians from owning the practice entity, so a clean management services structure with a physician owner is essential to capturing the management company economics. Get this legally locked before close to avoid post-close friction.
Obtain an independent real estate appraisal, since only a broker's opinion of value ($0.9M to $1.5M) exists today. A firm appraisal supports the SBA collateral position and clarifies exactly how much of the $10M price is bricks versus operating goodwill. This also strengthens your negotiating position on allocation.
Model the compensation scenarios carefully and negotiate the continuing physician's rollover terms. The reported EBITDA swings meaningfully depending on whether you use $700k replacement comp or MGMA-market $600k per physician, which drops EBITDA to roughly $1.85M. Aligning the retained physician with a minority equity rollover keeps incentives shared and reduces flight risk.

Diligence notes

Scrutinize the physician compensation assumptions because they drive the entire valuation. The gap between $2.7M SDE, $2.35M EBITDA after $700k replacement comp, and $1.85M EBITDA at MGMA-market pay is material, and the true normalized number depends on what it actually costs to replace both physicians. Verify the terms the current physicians have indicated in principle are contractually committed.
Assess key-person and recruiting risk directly. The moat depends on the difficulty of recruiting gastroenterologists to rural East Texas, which cuts both ways: it protects you from competition but also means replacing the retiring founder or the continuing physician is genuinely hard. Confirm the continuing physician's long-term intentions and the pipeline for a recruited associate.
Audit payer contracts and reimbursement exposure. With 25% traditional Medicare, 6% Medicare Advantage, and 9% VA/government, a meaningful slice of revenue is subject to CMS rate schedules and potential ASC reimbursement changes. Review the commercial contracts that have gone unrenegotiated for a decade to confirm both current rates and renewal terms.
Validate ASC licensing, CMS certification, and Medicare accreditation status. The facility fee revenue depends entirely on maintaining the separately licensed ASC and its Medicare certification, so confirm there are no compliance issues, survey deficiencies, or accreditation gaps. Any lapse here directly threatens a core revenue line.
Confirm the real estate valuation and the mechanics of the real estate partnership included in the sale. No independent appraisal exists, and the building represents roughly $0.9M to $1.5M of the $10M price, so an accurate valuation matters for both financing and allocation. Verify the partnership structure conveys cleanly and unencumbered.
Review the trend and sustainability of the ASC facility revenue that hit an all-time high in 2025 with 2026 running stronger. Understand whether this is durable volume growth, favorable case mix, or a one-time uptick, because the forward multiple hinges on whether that momentum continues. Trace the growth to specific procedure and payer drivers in the CIM.

Source

Originally listed on BizBuySell. View original listing →