$9.0M
$3.0M
18.3x
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Beatiful medical facility looking for a partner to undertake growth project.
Why we like it
- Healthcare delivery is about as recession-resistant as cash flow gets. Patients still show up for medical services in a downturn, and the $3M reported cash flow on $9M revenue implies a healthy roughly 33 percent margin if the numbers hold up under scrutiny.
- Medical facilities benefit from durable demand tailwinds in Florida specifically, where an aging and growing population drives structural volume growth in healthcare services. That demographic tailwind supports the growth thesis the seller is pitching.
- This is framed as a partnership rather than a distressed sale, which suggests the owner wants to stay in and keep operating. A motivated operator with skin in the game aligned alongside your capital can de-risk execution versus buying out an exiting owner.
- A facility already at $9M revenue with positive cash flow is past the fragile startup stage. You are funding expansion on top of a proven, revenue-generating base rather than betting on an unproven concept.
How to improve it
- Nail down the actual deal structure in the first conversation: what percentage of equity does $55M buy, what governance and control rights come with it, and is this primary capital into the business or secondary to the owner. The entire investment thesis hinges on answers the listing does not provide.
- Reprice the deal against real healthcare comps. Established medical facilities typically trade at 3x to 6x cash flow, so an 18.33x headline needs to be justified entirely by the growth project economics, and you should model the deal on post-expansion earnings, not trailing $3M.
- Demand the detailed growth project plan with a use-of-funds breakdown, projected incremental revenue, ramp timeline, and expected return on the deployed capital. Fund only against milestones, not a lump-sum handover.
- Analyze the payer mix within the first 30 days. Concentration in Medicare, Medicaid, or a single commercial payer materially changes reimbursement risk, and a facility overexposed to government reimbursement rate cuts is worth far less than one with diversified commercial contracts.
- Map physician and referral dependency. If revenue concentrates in one or two physicians or a narrow referral network, structure retention and non-compete protections so the value does not walk out the door post-close.
- Verify licensure, certifications, and regulatory standing before anything else. Healthcare deals live or die on compliance, and any open Stark Law, Anti-Kickback, or billing audit exposure can wipe out the equity you are buying.
Diligence notes
- The 18.33x multiple is the single biggest flag. Confirm whether the $55M is an asking price for the whole business, for a partial stake, or a total growth-round valuation, because at face value this is roughly triple what a comparable medical facility should command on trailing cash flow.
- Validate the $3M cash flow figure with audited or CPA-reviewed financials, and reconcile it against tax returns. Healthcare billing is complex, and reported cash flow can be inflated by aggressive coding, uncollected receivables, or add-backs that will not survive normalization.
- Investigate the reimbursement and billing environment thoroughly. Review the payer contracts, denial rates, days in AR, and any history of billing audits or clawbacks, since reimbursement risk is the defining exposure in any medical facility acquisition.
- Clarify the facility type and its regulatory framework. Whether this is a surgery center, clinic, or specialty practice determines the licensing regime, malpractice exposure, and Certificate of Need considerations in Florida, all of which affect both value and the feasibility of the growth project.
- Confirm the real estate arrangement. Determine whether the facility owns or leases its space, what the lease terms are, and whether any real estate is bundled or separate, because occupancy cost and lease security materially affect the ongoing cash flow you are underwriting.
Source
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