$2.7M
$948K
3.4x
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The Company is an occupational Health Clinic specialized in work loss prevention programs to decrease the prevalence of drugs in the workplace. It also provide mobile services across the USA for large corporations.
Why we like it
- Earnings quality is strong with $948K cash flow on $2.67M revenue, a 36% margin that is excellent for a services business. The asking multiple of 3.37x is reasonable for compliance-driven healthcare-adjacent work, and the margin profile suggests pricing power and low variable cost per test.
- The moat is regulatory and relationship-based. Workplace drug testing is mandated or insurance-driven in trucking, construction, logistics, and DOT-regulated industries, so demand is sticky and recurring. Large corporate accounts with mobile service contracts are not easy to displace once embedded in an employer's hiring and compliance workflow.
- Market tailwinds favor the category. Tightening DOT regulations, rising employer liability concerns, and the spread of random and post-incident testing programs all expand the addressable spend per employer. The mobile delivery model lets the business win contracts in geographies where competitors lack physical presence.
- The positioning as not a lab is an operator advantage, not a weakness. It avoids the capital intensity and regulatory exposure of running a CLIA lab, while capturing the higher-margin program management and collection layer. That keeps capex light and makes the cash flow cleaner to underwrite.
How to improve it
- Audit the top 10 corporate accounts and lock them into multi-year contracts with annual price escalators. If revenue is concentrated in a handful of large mobile clients, formalizing those relationships protects the cash flow and materially de-risks the asset for a future resale.
- Build out a recurring revenue layer through bundled annual testing programs, random pool management, and DOT compliance administration. Converting transactional testing into managed subscriptions raises retention and creates predictable monthly billings that command a higher exit multiple.
- Expand the mobile footprint into adjacent occupational health services such as physicals, respirator fit testing, audiograms, and vaccinations. The collection infrastructure and corporate relationships are already in place, so each added service line lifts revenue per client with minimal incremental acquisition cost.
- Implement a structured B2B sales motion targeting trucking fleets, construction firms, and staffing agencies. These industries have mandated testing requirements and high turnover, which drives repeat volume, and a dedicated outbound effort could meaningfully grow the corporate book.
- Invest in software for scheduling, results delivery, and compliance reporting that integrates with employer HR systems. Becoming embedded in a client's onboarding workflow raises switching costs and is the single biggest driver of contract stickiness in this category.
- Pursue partnerships or white-label arrangements with third-party administrators and occupational health networks. These channels feed steady referral volume and let the business scale geographically without building owned infrastructure in every market.
Diligence notes
- Verify the composition of the $948K cash flow and what owner add-backs are included. Confirm how much is true normalized earnings versus discretionary expenses, and whether seller compensation is reflected in the figure.
- Assess customer concentration carefully. Mobile services for large corporations can mean a few dominant accounts, so quantify what percentage of revenue the top three to five clients represent and the length and cancellation terms of those contracts.
- Confirm the regulatory and certification status. Even as a non-lab, the business needs proper credentialing for DOT collections, certified collectors, and chain-of-custody compliance, so verify all licenses, MRO relationships, and any history of regulatory issues.
- Clarify the role of the owner and key staff in winning and servicing accounts. If corporate relationships are tied to the seller personally, the transition risk is high and you need a defined handover plan plus retention of certified collectors.
- Examine the mobile operations economics including vehicle ownership, staffing model, and the geographic spread of service delivery. Understand whether the national reach is owned, subcontracted, or partner-dependent, since that affects both margins and scalability.