Los Angeles Home Health Care Agency, 20-Year Medicare-Contracted Provider

$1.5M

Revenue

$528K

SDE

3.4x

Multiple

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Full Editorial Writeup

This is a licensed skilled home health care agency serving the greater Los Angeles metropolitan market, operating under one owner for roughly 20 years. It delivers clinical in-home services including skilled nursing, physical therapy, occupational therapy, speech therapy, certified home health aide care, and social work support. The agency runs on industry-standard platforms (WellSky/Kinnser, Connex, PECOS integration) and carries current licensing with its next regulatory survey not due until June 2027, which gives a buyer runway before the next compliance cycle.

The revenue base is anchored by Medicare and a contract with a well-known IPA, layered with referral relationships from hospitals, physician offices, and insurers. That payer mix matters here: Medicare-certified home health is a reimbursement-driven, referral-fed business, and 20 years of standing referral channels plus a Director of Nursing with 20 years of tenure represent the real intangible value being sold. SDE of roughly $528K on $1.479M of revenue is a 36 percent margin, which is healthy for a compliant, staffed home health operation.

The stated angle is unused capacity: current census sits below historical peak, and the existing licensing and infrastructure can support materially higher patient volumes without proportional overhead. The office is relocatable subject to regulatory and payer approvals. The seller is exiting to focus on other business interests rather than retiring, and some seller financing may be available to qualified buyers. At $1.8M (3.41x SDE), this is priced like a stable, licensed cash-flow asset rather than a distressed or turnaround situation.

Why we like it

Earnings quality is grounded in tax-return-supported SDE of $528K on $1.479M revenue, a clean 36 percent margin from a 20-year operating history. Home health revenue is largely Medicare and IPA reimbursement driven, which means the cash flow is contracted and recurring rather than project-based or seasonal. That is the kind of boring, durable earnings stream that survives ownership transitions when the license and clinical staff stay in place.
The moat is regulatory and relational, not marketing spend. A current Medicare certification, an IPA contract, a clean June 2024 survey with the next review not due until 2027, and 20-year hospital and physician referral relationships are extremely hard and slow to replicate from scratch. New entrants face licensing timelines, survey risk, and payer credentialing that take years, which protects incumbent census.
Market tailwinds are demographic and structural: the aging US population and the systemic push to move care out of hospitals and into the home make skilled home health a long-duration growth category. Los Angeles County is one of the largest and densest patient markets in the country. Demand for skilled nursing and therapy in the home does not evaporate in a recession because it is medically necessary and reimbursement-funded.
There is real operator upside baked into the price. Management explicitly states current census runs below historical capacity, meaning the fixed infrastructure (licensing, DON, admin, EMR platforms) can absorb more patients with minimal incremental overhead. A hands-on owner who rebuilds census toward prior peaks captures most of that new revenue as margin.

How to improve it

Rebuild census toward historical capacity in the first 90 days by re-engaging dormant referral sources. Meet personally with the hospital discharge planners, physician offices, and the IPA contact to reset relationships that may have drifted while the owner focused on other interests. Because the infrastructure is already paid for, incremental patients drop largely to the bottom line.
Audit and optimize the payer mix and reimbursement capture. Under PDGM, coding accuracy, OASIS documentation quality, and episode management directly drive Medicare revenue per patient. Bring in a home health coding and revenue-cycle specialist to review whether the agency is leaving reimbursement on the table on current episodes.
Formalize referral marketing rather than relying on word-of-mouth and legacy relationships. Hire or assign a dedicated community liaison to systematically call on skilled nursing facilities, hospitals, and physician groups. A repeatable referral pipeline reduces key-person risk tied to the owner's personal relationships.
De-risk the clinical leadership dependency. The Director of Nursing with 20 years tenure and the 15-year medical director relationship are single points of failure. Lock in retention agreements, document a succession plan, and cross-train a backup clinical manager before those relationships become a transition liability.
Tighten labor economics across the 30-contractor field workforce. Model whether converting select high-utilization contractors to employees improves scheduling reliability and margin, and benchmark visit rates against reimbursement to protect the 36 percent margin as census grows.
Evaluate expanding service lines or geography within the existing license. Adding hospice or personal care adjacencies, or extending coverage to underserved zip codes in LA County, leverages the same admin and compliance backbone. The relocatable office flexibility gives room to reposition toward denser referral corridors.

Diligence notes

Verify the Medicare certification and IPA contract are transferable to a new owner and understand the change-of-ownership (CHOW) process. In home health, a CHOW can trigger reassignment and reimbursement holds; confirm timing, any Medicare enrollment relidation, and whether the IPA contract survives a change of control. This is the single most important item because the payer relationships are the business.
Pull three years of tax returns and reconcile the $528K SDE claim, since the listing itself hedges with 'approximately' and 'based on tax return documentation.' Break out revenue by payer (Medicare vs IPA vs other) and by episode to confirm concentration risk. Confirm the 'below historical capacity' claim by requesting the historical census trend to validate the growth thesis.
Scrutinize regulatory and compliance history beyond the clean June 2024 survey. Request prior survey results, any plans of correction, complaint history, and ADR or audit activity from Medicare/CMS. Home health carries meaningful clawback and fraud-audit risk, so a clean surface can hide reimbursement recoupment exposure.
Examine the 40-person workforce structure, especially the 30 contractors. Confirm proper 1099 classification to avoid misclassification liability, and assess retention risk for the DON and medical director whose long tenures underpin operations. Understand whether staff will stay through and after transition.
Confirm the lease terms and relocatability. Rent is only $3,200 per month, but verify remaining term, assignment rights, and whether any planned relocation would require new licensing or payer re-approval that could interrupt operations. Clarify exactly what seller financing terms are on offer and to whom.

Source

Originally listed on BizBuySell. View original listing →