Stark County Residential Care Homes - Healthcare Services

$1.7M

Revenue

$714K

SDE

3.5x

Multiple

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Full Editorial Writeup

This is a government-contract healthcare operation running five licensed residential homes in Stark County, Ohio, serving adults with developmental disabilities. The business operates at 50% capacity (25-30 residents across homes designed for 50-60 total) with 24/7 staffing using a contracted workforce model. Revenue comes entirely from government-backed Medicaid waiver services through contracts with Stark County Board of Developmental Disabilities and Ohio Department of Disabilities and Aging.

The model generates $1.74M in annualized revenue at current occupancy levels, with a 25% net profit margin producing $741K in seller's discretionary earnings. Each 3-4 bedroom home provides person-centered care with multiple service offerings including residential care, intensive group home respite, personal care assistance, transportation, and day habilitation services. The business holds active healthcare provider licenses through March 2027 and government contracts through December 2026.

This represents a classic "boring but profitable" healthcare infrastructure play in a recession-resistant sector with demographic tailwinds. The contracted workforce model provides operational flexibility while the government payment structure eliminates collection risk, though it caps pricing power and creates regulatory dependency.

Why we like it

Recession-proof revenue stream with zero collection risk since all payments come from government-backed Medicaid contracts. The business generates $1.74M annually at only 50% occupancy with 25% net margins, creating a predictable cash flow foundation that doesn't depend on consumer discretionary spending or economic cycles.
Massive expansion runway within existing infrastructure since the homes are operating at half capacity with room for 25-30 additional residents. At full occupancy, this business could potentially double revenue to $3.5M+ while maintaining similar cost structure, creating significant operating leverage.
Demographic tailwinds driving long-term demand as the population of adults with developmental disabilities continues to grow while institutional care options decline. Government policy increasingly favors community-based residential care over larger institutional settings, supporting this exact model.
SBA qualification provides acquisition financing advantages for qualified buyers, reducing the capital requirements and improving returns on invested equity. The 3.5x multiple on a government-contracted healthcare business with expansion potential represents reasonable entry valuation.

How to improve it

Immediately focus on increasing occupancy from 50% to 75-80% within the first year by developing relationships with case managers, social workers, and discharge planners at local hospitals and institutions. Each additional resident represents approximately $69K in annual revenue based on current per-resident averages.
Implement robust staff recruitment and retention programs to reduce turnover costs and ensure consistent 24/7 coverage. Partner with nursing schools, community colleges, and workforce development programs to create a reliable pipeline of qualified caregivers.
Standardize operations across all five homes with consistent policies, procedures, and quality metrics to improve efficiency and prepare for potential expansion. Develop centralized administrative functions for billing, scheduling, and compliance management.
Diversify revenue streams by adding complementary services like day programs, transportation services, or respite care that can generate additional per-resident revenue while leveraging existing staff and infrastructure.
Build relationships with state agencies and advocacy organizations to stay ahead of regulatory changes and identify opportunities for additional contract awards or service expansions within the existing footprint.
Develop acquisition criteria for additional homes in Stark County or adjacent counties to scale the platform, focusing on properties that can be converted to residential care facilities or existing operations that can be consolidated.
Implement technology solutions for scheduling, documentation, and compliance tracking to reduce administrative burden and improve operational efficiency across all locations.
Create comprehensive emergency preparedness and business continuity plans to protect against operational disruptions and maintain compliance with healthcare regulations.

Diligence notes

Verify the actual contract terms, renewal processes, and payment rates with Stark County Board of Developmental Disabilities and Ohio Department of Disabilities and Aging. Confirm that contracts are transferable and understand any performance requirements or penalties that could impact future payments.
Conduct thorough analysis of the 50% occupancy rate to determine if it's due to operational issues, market conditions, or licensing constraints. Interview staff, case managers, and families to understand resident satisfaction and any operational challenges.
Review all healthcare licenses, certifications, and compliance records including any citations, violations, or corrective action plans. Confirm renewal requirements and costs, especially given the March 2027 license expiration.
Analyze the contracted workforce model in detail including staffing ratios, wage rates, turnover statistics, and backup coverage arrangements. Assess whether current staffing costs and availability support the expansion to full occupancy.

Source

Originally listed on BusinessBroker.net. View original listing →