Medicare-Certified Home Health Agency, 14-Year Chicago-Area Operator

$4.1M

Revenue

$1.1M

SDE

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Full Editorial Writeup

Founded in 2011, this Medicare-certified and State-licensed home health agency operates out of the greater Chicago suburbs and serves eight densely populated Illinois counties: Cook, Lake, McHenry, Kane, Kendall, DuPage, Will, and Winnebago. On roughly $4.1M of revenue it produces about $1.07M of EBITDA, a 26% margin that is strong for the category and reflects a business that has learned to price and manage clinical risk rather than chase volume. The company differentiates by taking on high-acuity, complex cases including chronic wound care, IV antibiotics, and respiratory therapy for ventilator patients, alongside standard skilled nursing and therapy.

The demand engine is the notable part here. The agency receives daily organic referrals from five major hospital systems with zero marketing spend, ranks on "Top 10" discharge lists for major networks, and holds preferred status with Rush. By accepting difficult cases that competitors turn away, it has built a durable position with hospital discharge planners, the people who actually control patient flow in this business. Ownership has also negotiated above-average reimbursement rates with top-tier plans including Humana, United Healthcare, and HealthSpring.

Operations are run by a tenured management team, a COO with 15 years and a Director of Nursing with 13 years, which materially de-risks an ownership transition in a business where clinical compliance and staff continuity are everything. The 38-person team works from a 2,000 sq ft leased office at 70% utilization, leaving room to grow revenue 30% to 40% without relocating. Reason for sale is to pursue other interests.

Why we like it

Earnings quality is genuinely strong: $1.07M EBITDA on $4.1M revenue is a 26% margin, and the referrals come from five hospital systems with zero marketing spend. That means the demand is structural, not bought, which is rare and valuable in home health where most agencies bleed margin on patient acquisition.
The moat is the discharge planner relationships and the willingness to take high-acuity cases (ventilator, IV antibiotics, complex wound care) that competitors decline. Preferred status at Rush and "Top 10" placement on major networks are relationships you cannot replicate with a checkbook, and they insulate the business from the price competition that hits commodity agencies.
Home health is durable and countercyclical: aging demographics drive volume regardless of the economy, and Medicare plus managed care plans pay reliably. The company also negotiated above-average reimbursement with Humana, UnitedHealthcare, and HealthSpring, so it captures more per episode than the median agency.
The tenured management team (COO at 15 years, DON at 13 years) is the operator advantage. In a business where a single compliance lapse or a Director of Nursing departure can sink referrals, a bought-in clinical leadership team means the seller leaving is far less scary than it would be at a founder-dependent agency.

How to improve it

Fill the empty office capacity: at 70% utilization the footprint supports 30% to 40% revenue growth with no new lease. Add clinical staff against the existing referral pipeline before spending a dollar on marketing, since the referrals already exceed what the current headcount can convert.
Formalize and deepen the hospital referral relationships. Map every discharge planner across the five systems, put a light CRM and a dedicated liaison against them, and turn informal preferred status into written preferred-provider arrangements that are harder for a competitor to peel away.
Expand the payer mix and rate leverage. The team already secured above-average rates with Humana, UHC, and HealthSpring; use that track record to renegotiate the remaining plans and add contracts, lifting revenue per episode without adding a single new patient.
Pursue geographic expansion via the state application process the listing flags. The agency already serves eight counties; adjacent county licensure lets you capture referrals from the same hospital systems' other campuses, extending the existing moat rather than building a new one.
Build a second-line clinical management bench. The business leans on one COO and one DON; cross-train and document their roles so the high-acuity specialization survives a departure and so the agency can staff a second market without diluting quality.
Tighten revenue cycle and OASIS documentation. High-acuity cases mean higher reimbursement but also more audit exposure; invest in coding accuracy and denial management to protect the 26% margin and reduce clawback risk under Medicare review.

Diligence notes

Verify referral concentration and durability. Five hospital systems drive daily volume, but confirm how much revenue comes from the top one or two and whether preferred status at Rush is contractual or relationship-based. Relationship-driven referral flow can walk out the door with the seller or a key liaison.
Scrutinize payer mix and reimbursement sustainability. Get the split between traditional Medicare and Medicare Advantage plans, confirm the "above-average" rates are locked in contracts, and stress-test the model against ongoing CMS home health rate cuts and Advantage plan rate pressure.
Confirm compliance and survey history. Pull the most recent Medicare certification survey results, any deficiency findings, corrective action plans, and audit or clawback history. In high-acuity home health, a single survey failure or documentation problem can freeze admissions and destroy referral flow.
Assess the reason for sale and management retention. The seller cites pursuing other interests, so probe why a 26% margin business is being sold and secure employment or retention agreements with the tenured COO and DON. The value case collapses if either clinical leader leaves post-close.
Reconcile the EBITDA figure to reality. Cash flow (SDE) is not disclosed and asking price is blank, so obtain add-back schedules, tax returns, and cost report filings to confirm the $1.07M EBITDA is clean and not padded with owner compensation normalizations or one-time items.
Evaluate staffing stability and labor market. With 38 full-time employees delivering complex clinical care, confirm nurse and therapist turnover, wage trends, and reliance on contract clinicians. Labor shortages in skilled home health nursing directly cap the growth story the listing sells.

Source

Originally listed on BizBuySell. View original listing →