Strong Growth Projected in 2024-2025 Driven by Many New Accounts Added in 2023
The Lab was started about ten years ago as an LLC in desirable Novitas MAC of Texas and offers an array of clinical test panels. It is CLIA and COLA certified and is in-network with several commercial payors like BCBS of TX, AZ, and IL, Medicare, and several Medicaids, including almost impossible to get into Medicaids such as Driscoll and Superior HealhPlan and also hard to get Medicaids in many states including GA. The Lab offers 18 tests, including Toxicology, Infectious Disease Testing, and Genetic Testing, to physicians nationwide. Its test menu provides physicians access to innovative lab tests that assist them in treating their patients on time. The Lab’s reports include easy-to-read summaries with rule-based logic to show detected/non-detected medications and patient testing history. Customer Service has been a critical ingredient in their success. Thus, physicians using the Lab can access the Lab’s clinical staff and Medical Director to help assist with any questions the physicians may have.
While the Lab offers Covid testing, it has never had a significant volume of Covid testing. Its current volume of COVID testing is from referring clinics. Both COVID testing and RPP panel testing increase during the flu season. It is the type of sustained volume that one would expect to see in laboratories because when the patient is sick with flu / respiratory disease, the physicians often want to rule out COVID-19.
Great Opportunity for Strategic Buyers
It takes years to acquire some of the Payor Contracts this Lab has. This includes some of the important ones for the Texas market, such as Driscoll and Superior Health – these two are very important for the TX market and nearly impossible to get. It also has many other Medicaids from many states and several Blues.
The Lab has gained many new accounts, including several clinics and over 200 Assisted Living Facilities (ALFs). It may take all of 2024 and part of 2025 to onboard all of the ALFs, but onboarding of some clinics and ALFs has just started in November 2023, and significant financial growth should occur in the coming two years.
A strategic buyer can bring even more volume and complementary payor contracts to make this a large Lab relatively quickly.
Financial Highlights
The table below summarizes the past two years of financials and short-term projections for 2023 . As a result of the new accounts coming on board
| (All figures are in $ millions) |
FY 2023* (Proj fm 10 months) |
FY 2022 | FY 2021 |
| Net Revenue | 3.7 | 5.7 | 4.8 |
| Adjusted EBITDA | .31 | 0.52 | 0.41 |
*In 2023, it lost some important clinics that were using the Lab as they did not have Medicare but in 2023, they acquired a lab and could use their own Medicare. However, the Lab gained some major new accounts that will significantly contribute to its growth in 2024 and 2025.
Asking Price
The asking price of the Lab is $1.95M plus incentive payments tied to an increase in revenue over the next two years tied to the accounts added by the Lab in 2023. The asking price takes into account, the cash flow, the growth potential, payer contracts, and about $1M in assets and inventories that are mostly paid off.
Reason For Sale
Over the last two years, the owners have embarked on two new ventures in the Healthcare Industry, and they already have a network of many Sales Reps. This new venture presents a very large opportunity and requires their time and attention as well as a significant financial investment. They feel that the Lab is on a solid growth path, allowing an experienced buyer to take it to the next level. The managing partner can stay on for some time to help in a smooth transition.
