Established Pediatric Practice, 20-Year Florida Provider

$2.0M

Revenue

$922K

SDE

1.9x

Multiple

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Full Editorial Writeup

This is a full-service pediatric practice in Florida, founded roughly two decades ago, generating about $2.0M in revenue and $921K in cash flow. It serves patients from newborns through age 25 (and to 30 for special-needs patients) with well-child exams, immunizations, chronic condition management, sports physicals, behavioral health, and developmental screening. The practice is Patient-Centered Medical Home (PCMH) certified and operates from a fully equipped, child-friendly Class A medical office that is turnkey from day one.

The economics here are the story. A 46% cash flow margin on $2M in revenue is strong for a pediatric group, and the diversified service mix (well visits, chronic care, diagnostics, specialty) plus a balanced Medicaid, commercial, and cash-pay payer mix gives the top line real durability. The practice pulls referrals from local hospitals, birthing centers, OB/GYN groups, and behavioral support organizations, which is a moat that took twenty years to build and is hard for a new entrant to replicate quickly.

At a 1.95x multiple on cash flow, this is priced well below where clean primary-care and pediatric practices typically trade. The obvious catch: nearly half a million dollars of that $921K cash flow is likely tied to the seller physician's own clinical production. The real question for any buyer is how much of that SDE survives once you have to pay a replacement provider, and that single answer determines whether this is a bargain or a fairly priced deal.

Why we like it

Earnings quality is anchored in recurring, insurance-reimbursed pediatric visits: immunizations, well-child checks, chronic care, and physicals that families schedule regardless of the economy. A diversified payer mix across Medicaid, commercial, and cash-pay reduces single-payer concentration risk and smooths collections. The $921K cash flow on $2.0M revenue implies a healthy 46% margin.
The moat is twenty years of referral relationships and PCMH accreditation. Inbound flow from hospitals, birthing centers, OB/GYN groups, and behavioral support organizations is genuinely sticky, and multi-generational patient loyalty means switching costs are emotional as well as logistical. PCMH certification also unlocks value-based reimbursement that competitors without it cannot access.
Pediatric demand is structurally recession-resistant and the Florida market brings a steady influx of young families. Parents defer their own care in a downturn but rarely their children's immunizations, sick visits, or school-required physicals. This is about as defensive as healthcare cash flow gets.
The valuation is the operator advantage. At 1.95x cash flow, the entry multiple leaves margin for error versus the 3x to 5x that clean medical practices often command, giving a buyer downside protection even if a portion of SDE is provider-dependent.

How to improve it

Add mid-level providers (NPs/PAs) against existing capacity in the first 90 days. Mid-levels handle well visits and routine care at a fraction of physician cost, which expands visit volume and protects margin as you decouple cash flow from the selling physician.
Formalize Saturday and extended-access hours to capture working-parent volume that currently leaks to urgent care and competitors. Extended hours also improve PCMH scoring and can lift value-based reimbursement. This is a scheduling change with immediate revenue upside and low incremental cost.
Launch telehealth for sick visits, behavioral health follow-ups, and medication management. Virtual visits monetize provider downtime and expand geographic reach without adding real estate. This is explicitly flagged as an untapped lever.
Optimize the payer contract mix by renegotiating the lowest-reimbursing commercial and Medicaid managed-care agreements. Even a few points of rate improvement on a $2M book flows straight to cash flow. Benchmark current rates against regional pediatric norms before closing.
Build a targeted digital and community marketing engine aimed at the incoming young-family demographic. Partnerships with the referring birthing centers and OB/GYN groups can be formalized into structured referral pipelines. New-patient acquisition here compounds because pediatric patients stay for 20-plus years.
Layer in ancillary and specialized service lines that reimburse well, such as expanded developmental and behavioral screening, lab draws, and vaccine administration programs. These raise revenue per visit without proportionally raising overhead. The practice already has protocols in place to build on.

Diligence notes

Quantify how much of the $921K cash flow is the seller physician's personal clinical production versus true owner earnings. If you must hire a replacing physician at $250K-plus, the adjusted SDE and effective multiple change materially. This is the single most important number in the deal.
Pull the payer mix and reimbursement detail: what percentage is Medicaid versus commercial, and what are the actual contracted rates. Heavy Medicaid concentration caps upside and exposes you to state budget cycles. Verify no single payer or contract is at risk of nonrenewal.
Confirm provider credentialing, licensing, and malpractice history, plus whether the seller and any existing NPs/PAs will stay through transition. Patient retention in medical practices hinges on continuity of provider relationships, so a hard exit by the founding physician is a real attrition risk.
Review the lease on the Class A office, since real estate is not included. Confirm term, renewal options, and rent escalators, because a below-market lease expiring soon can quietly erase margin. Also verify all equipment is owned and functional versus leased.
Validate the PCMH certification status, renewal requirements, and any associated value-based revenue that could lapse post-sale. Confirm patient volume trends over the last three years to test the 'growing patient base' claim against actual visit counts and revenue.

Source

Originally listed on BusinessBroker.net. View original listing →