GI Surgery Practice & Ambulatory Surgery Center, Louisville KY (CON State)

$1.6M

Revenue

$971K

SDE

5.7x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

Project Sunshine is a stand-alone ambulatory surgery center (ASC) in Jefferson County, Kentucky, focused on gastrointestinal procedures. The center performs colonoscopies, EGDs, hemorrhoid banding, diverticulosis treatment, esophageal testing and dilation, flexible sigmoidoscopy, and GERD treatment, and it operates alongside a gastroenterology partnership that feeds surgical volume. Founded in 1997, it is credentialed for Medicare, Medicaid, and private insurance, which is the lifeblood of any ASC's reimbursement mix.

The critical detail buried in the title is CON State. Kentucky requires a Certificate of Need to open a new ASC, which means this facility carries a regulatory moat that a new entrant cannot simply build around. That barrier, combined with the industry-wide shift of GI procedures out of hospitals and into lower-cost outpatient settings, positions the center well against the larger Norton and University of Louisville hospital systems it competes with.

At $1.58M revenue and $970K EBITDA, this is a high-margin, single-surgeon practice being sold at 5.72x by a retiring physician. The building is owned by the seller but offered separately, so the asking price is for operations only. The economics are attractive, but the entire enterprise leans heavily on one departing clinician, which is the central risk a buyer must underwrite.

Why we like it

Earnings quality is strong on paper: $970K EBITDA on $1.58M revenue is a roughly 61% margin, which reflects the favorable economics of a facility fee model in an ASC. The revenue is diversified across Medicare, Medicaid, and private payors, all credentialed, so collections are institutional rather than dependent on a handful of accounts.
The durability comes from the Certificate of Need regime. In a CON state, a competitor cannot simply open a rival GI surgery center down the road, so this license is a genuine regulatory moat that protects volume and pricing in a way most SMB healthcare deals never enjoy.
Market tailwinds are real and secular: GI procedures are steadily migrating out of expensive hospital settings into stand-alone ASCs because payors want lower cost and patients want convenience. Colonoscopy screening demand also grows with an aging population and lowered screening-age guidelines, giving predictable, recurring procedural volume.
There is clear operator upside from a fixed asset base. The building has unused square footage for expansion, and the business can grow simply by recruiting additional surgeons and pushing more patients through the same facility, meaning incremental volume drops to the bottom line at high margins.

How to improve it

Solve the surgeon-succession problem first. Recruit and credential one or two additional gastroenterologists or GI surgeons during the seller's transition window so the practice is not a single point of failure, then structure their comp to align volume with facility economics.
Fill the unused building capacity by adding procedure rooms or extending block time. The fixed overhead is already paid, so each additional case largely converts to EBITDA, and even modest utilization gains on existing infrastructure meaningfully move earnings.
Build referral density with local primary care groups and the GI partnership. Formalize a referral pipeline for screening colonoscopies and GERD workups, since screening volume is the most predictable and repeatable revenue an ASC can carry.
Renegotiate private payor contracts. A retiring solo physician rarely optimizes commercial reimbursement rates; a professional operator with scale or a management platform can push for better facility fee terms and add higher-acuity GI procedures approved for the outpatient setting.
Add adjacent GI service lines within the existing CON scope, such as capsule endoscopy, anesthesia integration, and expanded esophageal testing. These deepen procedure mix and per-patient revenue without needing new facilities.
Tighten revenue cycle management. Audit denial rates, coding accuracy, and days-in-AR for Medicare and Medicaid claims, since ASC margins are highly sensitive to clean claims and prompt collections that a small owner-run billing function often leaves on the table.

Diligence notes

Confirm the Certificate of Need transfers cleanly to a new owner and understand any state approval process on change of control. The CON is the moat; if it does not convey or triggers a lengthy re-approval, the entire investment thesis weakens.
Quantify how dependent EBITDA is on the retiring physician's personal procedure volume. Pull case logs by surgeon, understand what share of revenue walks out the door on close, and stress test the numbers assuming a replacement surgeon ramps slowly.
Scrutinize the payor mix and reimbursement trends. Break out revenue by Medicare, Medicaid, and commercial, review CMS ASC facility fee schedules for the core CPT codes, and model exposure to future rate cuts on colonoscopy and EGD.
Clarify the real estate arrangement since the building is owned by the seller and sold separately. Negotiate lease terms or a purchase option up front, because an unfavorable lease from a former owner-landlord can quietly erode the operating margins you are paying 5.72x for.
Verify accreditation, licensing, and compliance status including CMS certification, state ASC licensure, anesthesia arrangements, and any open survey or deficiency history. A lapse in accreditation directly halts reimbursable procedures.

Source

Originally listed on BizBuySell. View original listing →