Fee-for-Service Dental Practice, Downtown Santa Barbara

$914K

Revenue

$553K

SDE

2.3x

Multiple

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Full Editorial Writeup

This is a fee-for-service general dental practice in downtown Santa Barbara, established in 2013. It runs out of a compact 1,100 square foot space on a low rent of $2,600 per month, with roughly 8 years remaining on the lease plus two 5-year options. The practice is fully paperless with high-end equipment including panoramic imaging and intraoral cameras, and it draws patients from Santa Barbara and surrounding coastal communities.

The headline numbers are what make this deal interesting: approximately $913,768 in annual gross revenue producing $553,360 in cash flow, a roughly 61 percent margin. Even more notable, the seller is generating that profit working only 12 days per month, which tells you the practice has a clean, high-margin operating model and an underutilized chair. Fee-for-service means no insurance write-offs or managed-care discounting, so the collected dollar is a real dollar.

At $1,250,000 the asking price is about 2.26x cash flow, which is reasonable to attractive for a dental practice of this profitability. The obvious thesis is a full-time or near-full-time dentist buying a lifestyle practice with meaningful upside by simply working more days and building out hygiene production. Seller financing is available through the listing broker, and the seller will stay on as an associate for up to a year to retain patients.

Why we like it

Earnings quality is unusually strong for the size: $553,360 of cash flow on $913,768 of revenue is a ~61 percent margin, and it is fee-for-service so there is no insurance discounting dragging on collections. The seller produces that on just 12 working days a month, which signals a lean, well-run chair rather than a grind.
Durability and moat come from a returning patient panel, a 12-year operating history, and a sticky downtown Santa Barbara location with free parking and a long lease runway (8 years plus two 5-year options). Dental is non-discretionary and recurring through recall hygiene visits, so patients come back on a schedule by default.
Market tailwinds favor fee-for-service dentistry in an affluent coastal community where patients can pay out of pocket for premium care. Santa Barbara demographics support higher case acceptance and elective procedures than an average market.
The operator advantage is obvious and quantifiable: the practice runs at roughly half-time. A new owner-dentist working full days and expanding hygiene has a clear, controllable path to materially higher production without acquiring new real estate or equipment.

How to improve it

Increase clinical days immediately. The seller works 12 days a month, so a buyer working 18 to 20 days should lift production substantially using the same fixed cost base of rent, equipment, and overhead, dropping most incremental revenue to the bottom line.
Build out a dedicated hygiene program. Adding or expanding a hygienist creates a recurring recall engine, generates its own production, and feeds restorative diagnoses back to the dentist, which is the single highest-ROI move the listing itself flags.
Add elective and higher-ticket services suited to an affluent coastal patient base, such as clear aligners, implants, and cosmetic dentistry. Fee-for-service patients in Santa Barbara will pay for these and they carry strong margins.
Implement a reactivation campaign on dormant patients from the 12-year chart base. A systematic recall and win-back effort typically surfaces untapped hygiene and treatment production without spending on new-patient acquisition.
Modernize patient acquisition with local SEO, Google reviews, and a membership plan for uninsured patients. A membership plan converts fee-for-service walk-ins into predictable recurring revenue and improves retention.
Review and tighten the fee schedule. Many lifestyle practices under-price relative to the local coastal market, and a disciplined fee update plus clear financing options can raise collections with minimal patient attrition.

Diligence notes

Verify the $553,360 cash flow and $913,768 revenue against production reports, bank deposits, and tax returns for at least three years. Confirm exactly which add-backs comprise SDE and whether the figure already assumes the seller working only 12 days.
Pull the practice management reports to understand active patient count, new-patient flow, hygiene reappointment rate, and revenue concentration. A practice running half-time can mask whether revenue is from a shrinking or stable panel.
Scrutinize patient and production dependence on the selling dentist. Fee-for-service relationships can be personal, so model attrition risk and confirm the one-year associate arrangement is structured to transfer goodwill and key patients.
Confirm the lease terms in writing: the $2,600 rent, the ~8 years remaining, and the two 5-year options, plus any escalators or relocation clauses. The low rent is central to the margin, so protecting it is essential.
Assess the age and condition of the high-end equipment and imaging, and estimate near-term capex. Verify there are no deferred replacements that would hit the buyer in the first year or two.
Understand the seller's stated reason (moving) and check for any competing practice the seller could open nearby. Secure a non-compete with appropriate geographic and time scope as part of the deal.

Source

Originally listed on BizBuySell. View original listing →