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Clinical Research-Phase CRO - High Growth Potential at High Margins

Mid West

Seller Financing Available
Clinical Research-Phase CRO - High Growth Potential at High Margins
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Asking Price: N/A

Cash Flow: $5,279,000

Gross Revenue: $8,181,000

EBITDA: $4,947,000

FF&E: $25,000

Inventory: N/A

Established: 2012

Clinical Research-Phase CRO - High Growth Potential at High Margins

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Business Description

The Company conducts Phase I clinical trials for drug companies and contract research organizations (CROs) that often manage clinical trials for drug companies. The trials are largely part of the FDA approval cycle for bringing a new drug or treatment to market, with the Company’s focus being the first phase of trials conducted in humans in which drug safety and pharmacokinetics are studied, among other possible attributes. The Company conducts trials in accordance with detailed protocols issued by the drug companies, and is responsible for recruiting healthy volunteers or patients (referred to as “subjects”), dispensing drugs or sometimes placebo to subjects, and collecting data during an inpatient confinement period or over a series of subject visits. Drug companies indemnify the Company for its work.

The Company specializes in conducting complex, labor-intensive, high paying Phase I trials and is known for its uncompromising quality and speed in starting and completing trials. In recent years, it has focused on opioid testing, a very active research area due to human abuse issues, has developed a special population of opioid-liking subjects that participate in multiple trials over time, and enjoys significant repeat business. Over its years, the Company also has diverse expertise across a wide variety of drug classes and could pursue growth by pursuing trials for additional drug classes. The Company provides its services out of its 64-bed Phase I unit and can house subjects for weeks at a time. Increasingly, trial protocols are awarded to the Company that involve conducting multiple $1+MM iterations over time. For example, the Company is currently conducting the 5th iteration of one protocol it was awarded and the 6th iteration is scheduled to start in Q4, 2016. Trials / iterations typically are completed in 1-3 months, depending on the trial design. Contracts range from $200K on the low end to over $5MM. The driver of the business is $1+MM iterations. Increasing demand for its services has led to revenue and EBITDA growth in recent years, and the Company is well positioned for additional revenue and EBITDA growth.

Detailed Information

Employees:
Over 40.
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
The Company operates a 64-bed clinical pharmacology unit (CPU), or Phase I unit, with over 12,000 square feet on accessible, major thoroughfares, and in close proximity to a major medical center, emergency room, physician offices and offices of other medical providers. The facility includes an on-site processing laboratory, secure pharmacy prep and drug storage rooms, exam and phlebotomy rooms, a back-up generator, video monitoring, state-of-the-art temperature / humidity monitoring, laundry facilities, dining and recreational areas, and all requisite equipment and furnishings. While the Company has grown, there is still unused bed-night capacity (less than 15% of capacity was used in 2018 in generating $8.2MM in revenue) to support additional growth.
Competition:
Phase I clinical trials are conducted by stand-alone Phase I CROs / dedicated investigative sites, such as the Company, large, full service CROs with Phase I units, research sites that do a combination of Phase I and Phase II-IV trials, and academic and major medical centers. Large CROs tend to compete aggressively for less complex, healthy volunteer trials. Research sites doing both Phase I and Phase II-IV trials tend to have small Phase I units and therefore do smaller trials. Medical centers are very bureaucratic and slow-moving, making them less attractive. The Company pursues complex, higher-paying Phase I trials, where it has established vast expertise and an excellent reputation. This is a less competitive segment of the market that is much less penetrated by the large CROs and research sites doing Phase I and Phase II-IV trials. Because of its quick turnaround times and expertise, the Company has a significant competitive advantage over medical centers.
Growth & Expansion:
Phase I research sites with a reputation for expertise in conducting complex, labor-intensive trials with high quality clinical service and data and prompt enrollment, such as the Company, enjoy strong demand. This business can be grown significantly by 1) establishing a formal business development function (currently, the Company does not do lead development or marketing for new trials), 2) increasing utilization of the Company’s current facilities (less than 15% of available bed-nights were used in 2018), 3) expanding to new therapeutic areas or drug classes, 4) expanding its physician network to gain expertise, support for new therapeutic areas and access to new special populations, and 5) enhancing subject access by increasing its research subject database.
Financing:
Negotiable. Seller will find offers minimizing seller financing most attractive.
Support & Training:
Owner will support an ample transition period to train new ownership in the business, transition relationships and assist in identifying any replacements needed. The Company has a qualified professional working for it currently capable of taking over the Owner's role, if this is desired by an acquirer. Owner would like an ongoing part-time role after successfully transitioning the business and would consider retaining minority equity.
Reason for Selling:
Retirement financial planning. Owner would like to continue to work.
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David Blackburn

Business Listed By:
David Blackburn

Insight Business Consulting

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