Durable Medical Equipment Supplies

Los Angeles County, CA

Seller Financing Available
Durable Medical Equipment Supplies

Asking Price:$595,000

Cash Flow:$337,000

Gross Revenue:$2,275,000

EBITDA:N/A

FF&E:$75,000

Inventory:$300,000*

Rate/Sq. Ft.:N/A

Established:1989

*not included in asking price.

Durable Medical Equipment Supplies

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Business Description

This business has served Southern California customers in Orange County, Los Angeles County and the Inland Empire since 1989.

The company supplies products such as wheelchairs – both manual, powered and custom made, respiratory equipment such as oxygen and CPAP equipment, hospital beds, walkers, diabetic supplies, incontinent supplies and various durable medical equipment. Many of their products are geared toward the elderly, “baby boomers” being one of the fastest growing sectors of our population.

DME (Durable Medical Equipment) expenditures nationwide were $37.0 billion in 2010. In 2015 the total was $46.5 billion, and by 2020 the market is projected to exceed $60.0 billion.

The company’s customers are technically the patients, but the orders come from a pool of referral sources comprised of physician offices, hospitals, IPAs (Independent Physician Associations), dialysis centers, orthopedic centers, skilled nursing facilities and the like.

Up until 2013, approximately 40% of the company’s business was generated via Medicare (CMS). CMS introduced a competitive bidding process that drastically lowered margins. The company decided, rightly as it turned out, to move its focus away from Medicare and to expand its services to Managed Care and complex rehab, including custom wheelchairs – a unique niche. The numbers demonstrate that this was a smart move, and the company will continue to grow in these profitable areas.

Gross Sales in 2015 were $2.275 million ($1.736 million in 2013) with cash flowing to the owner of $345K. The influence of the Medicare bidding process has forced Gross Margins to have dropped from the low 70% range that was typically achieved in the “good old days” to a more stable number in the 62% range. 2016 is projected to produce a similar amount (because of the continued transition from Medicare to Managed Care volume), with growth of 4% to 6% projected for 2017.

The company is accredited and licensed by Medicare, Medi-Cal, The Joint Commission, State of California – Homed Medical Device License, and over fifty Managed Health Care Groups, Hospitals and Health Plans.

The current owner took over in 2011 and has made dramatic improvements to the administration of the business. Billing processes have been streamlined with the implementation of state of the art billing and payment processing software. The current owner has terrific skills in administration and accounting, but is weak in the sales and marketing function.

A new owner that has the sales and marketing skills necessary for growth will be able to take the business to its next level in short order.

We are seeking offers for all the tangible and intangible assets of the business, on a “cash-free, debt-free” basis of $595,000 plus the Working Capital of Inventory and Accounts Receivable. The WC is currently valued at approximately $645K and the A/R ($345K) will be available for financing on very flexible terms.

Detailed Information

Inventory:
Not included in asking price
Real Estate:
Leased
Building Sq. Ft.:
3,500
Lease Expiration:
12/31/2016
Employees:
10
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
Office and Warehouse in commercial park close to freeways
Competition:
See available "book' for full details
Growth & Expansion:
See available "book' for full details
Support & Training:
Full Support and Training will be given
Reason for Selling:
Other Opportunity

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Julian Solomons

Business Listed By:
Julian Solomons

Solomons Strategic Advisors

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