Under LOI: Tech-2538: Fairly New, Profitable Clinical Lab in Georgia

This opportunity is currently under exclusive LOI

Solid Platform for Growth – Completely Managed Lab – Very Little Owner Involvement


Established in 2018, this Lab provides state-of-the-art toxicology testing. The confirmatory tests for the clinicians help prescription management and improve quality measures and clinical care for their clients. The Lab Director is an experienced anatomical and clinical pathologist who supervises the lab and enables it to deliver the most accurate results. The Lab offers a variety of Tox screens and smoothly collaborates with physicians’ offices.

This Lab is a turnkey, profitable lab. The owners do not have a background in running the lab. Therefore, they have hired a management company that manages the lab’s operations and a billing company that provides the billing services and also manages insurance relationships.

The lab has several types of equipment that are paid off and in good running condition. It gets a steady stream of 200-300 samples per month. The owners are primarily absentee owners with other professional businesses (one of the partners is a veterinarian with two offices). Therefore, they are looking to sell the business and focus on their core competencies.

The business has built a solid foundation for growth. If one starts such a lab from scratch, it would be easily a year or more by the time one is ready to accept payments. Setting up a lab would entail finding space, building it out with lab benches, plumbing, hoods, hiring staff, getting equipment, getting them validated, obtaining CLIA certifications, and getting Medicare and Medicaid so that one can start accepting payments. In contrast, this lab is set up and running, has some business, and is profitable. The buyer can therefore focus on expanding the lab business and services.

This lab is ideal for a buyer capable of bringing new clients to grow its revenue. There are multiple avenues for growth. One should certainly focus on getting more toxicology clients from other pain management doctors in Monroe and Georgia. But equally importantly, one can also bring in COVID testing as well as several other PCR tests that would use the same equipment as used in COVID PCR testing. These tests include pulmonary tests (including asthma testing), Urinary Tract Infections (UTI) testing, and Women’s testing (various infections). These tests get excellent reimbursements (~$250 to $700 per test), much more than reimbursements from routine blood tests. Moreover, they use the same PCR equipment used in the COVID test. Once the PCR equipment is procured, the lab management company can validate PCR equipment in a few weeks for the various uses of the equipment and get these additional tests added to CLIA certification.

So in many ways, this lab is ideal for a business person who may not have any experience in running the lab but has good marketing skills and/or good medical contacts to get clients. The backend work of running the lab and billing would be taken care of by the management company and the billing company respectively. A buyer well-experienced in running the lab can certainly take over management of the lab as there is no long-term contract with the lab management company.

The transaction of a clinical lab is often via stock/interest purchase of the Company rather than a more common asset purchase. The buyer thereby acquires existing contracts with insurances and the CLIA license seamlessly. But it also opens up the buyer to certain risks down the road. If the previous owner was not honest and had fraudulently billed the insurance companies, these insurance companies can come after the new owner in the future. On the other hand, this is a very new lab, has used professional companies for billing services, and has done a minimal amount of billing so far.

Financial Highlights

The table below shows a summary of the past three years’ financials. Although the Company started its operations in 2018, it didn’t generate its revenues until 2019. It took some time to set up the lab, and get CLIA, Medicare, and Medicaid. Note that, overall the revenue has been fairly stable. Both 2020 and 2021 financials would have been better if the pandemic had not kept many of the physician clinics closed in the summer months of 2020 and again in early 2021 with the second surge.  the physician clinics were closed for several months, and they were primarily doing telemedicine. 2020 and 2021 revenues could have been better in absence of the pandemic

2021* 2020 2019
Gross Revenue  $294,590  $287,494  $318,357
Discretionary
Cash Flow
$109,590 $102,324 $134,862

*2021 Financials are partially estimated. Have revenue number but the overall expenses of 2021 were estimated to be similar to 2020 and 2019, which is a reasonable estimate. The finalized financials will be available shortly.

ASKING PRICE

The asking price of the lab is $650K.

The price is based on the fact that not only one is buying a turn-key running lab which is making a small profit, but that it is also saving at least a year from starting it from scratch. For someone to start the lab, set up the equipment, and get CLIA and Medicare would easily cost more than a year and significant money. Another advantage of this lab is that a third party manages it, and an outside party also does the billing. These are the most technical parts of running a clinical lab. Therefore, anyone can run it as long as they focus on essential management and marketing. The current owners were essentially not spending much time on the business, and the lab was running by itself and was profitable. As discussed earlier, the lab has a lot of potential by easily adding Covid and other molecular tests.

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Note: When inquiring about the lab, please email from your business address, and provide some details about your background, your company, and your ability to buy this lab.

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