This Healthcare / Medical at $2.8M Has Promise, But Needs Negotiation
Strong margins, fair price, and real cash flow. This is what a solid deal actually looks like.
This is a healthcare / medical business listed at $2.8M, generating $2.1M in annual revenue and $832,000 in seller's discretionary earnings. At a 3.37x cash flow multiple, the asking price sits above the industry average of 3.00x for healthcare / medical businesses. The profit margin is 40%, above the 19% industry average.
We ran this deal through the DealScore Pro Bulletproof Calculator to see how it holds up across all five scoring criteria. Here is the full breakdown.
Deal Snapshot
The deal snapshot tells a clean story. Revenue of $2.1M with a 40% margin means the business is generating real cash flow, not just top-line vanity. The 3.37x multiple is on the higher side relative to the industry average.
Financing Overview
Using the standard 80/10/10 SBA deal structure (80% SBA 7(a) loan, 10% seller financing, 10% buyer down payment), here is what this acquisition looks like when financed.
Why the Numbers Matter
The headline number most buyers fixate on is the asking price. But the asking price alone tells you almost nothing about whether a deal is worth doing. What matters is what happens after you finance it.
The post-debt cash flow of $404,337 per year is the real number. That is what you take home after every loan payment, every month, for the life of the loan. On a $280,000 cash investment, that is a strong return, and it is well above the $100K minimum threshold that the Bulletproof standard requires.
The DSCR of 1.95x means the business generates $1.95 for every $1 of annual debt payment. SBA lenders require a minimum of 1.25x. The Bulletproof standard requires 2.0x. This deal clears the bank minimum but falls short of the Bulletproof target, leaving you with a thinner safety margin.
The stress test is where many deals that look good on paper fall apart. We model a 20% drop in revenue and check whether the business can still cover all debt obligations. This deal passes. Even at $1.7M in revenue (down from $2.1M), the cash flow still services the debt. That is the kind of resilience you want in a financed acquisition.
Industry Context
📈 How This Deal Compares to the Healthcare / Medical Industry
Healthcare / Medical is one of the more stable acquisition targets. Demand tends to be recurring and local, and the skill requirements are well-defined. Lenders see healthcare / medical as a relatively safer bet, with an SBA default rate of 2.8% versus the 16.8% all-industry average.
The healthcare / medical industry carries a lower-than-average SBA default rate at 2.8%, compared to the all-industry average of 16.8%. Combined with a deal that performs well on the fundamentals, this is the profile lenders like to fund.
Strengths and Risks
✓ What Works
- Strong post-debt cash flow of $404,337 per year
- Adequate working capital reserves
- Survives a 20% revenue decline stress test
⚠ Watch Out For
- DSCR of 1.95x is below the safety threshold
- Purchase multiple of 3.37x is on the high side
- Key-person risk: verify the current owner's role in daily operations
- Lease terms and renewal risk
Who This Deal Is For
Best fit for:
Owner-operators with industry experience or management background who want a business that cash flows from day one.
First-time buyers looking for a straightforward acquisition with solid fundamentals.
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Frequently Asked Questions
Is $2.8M a fair price for a healthcare / medical business?
At 3.37x seller's discretionary earnings, this asking price is above the industry average multiple of 3.00x for healthcare / medical businesses. Deals priced below 2.50x are generally considered favorable for buyers, while anything above 3.70x starts to look expensive.
What is a good profit margin for a healthcare / medical business?
The industry average profit margin for healthcare / medical businesses is approximately 19%. This listing operates at a 40% margin, which is above average and suggests the business is managing costs effectively. Margins above 14% are generally considered healthy in the healthcare / medical industry.
Can I buy a healthcare / medical business with an SBA loan?
Yes. Healthcare / Medical businesses are commonly financed through SBA 7(a) loans using an 80/10/10 structure: 80% SBA loan, 10% seller financing, and 10% buyer down payment. For this $2.8M deal, that means approximately $280,000 in cash at closing. SBA lenders require a minimum DSCR of 1.25x, but conservative buyers target 2.0x or higher. This deal's 1.95x DSCR clears the bank minimum but falls short of the conservative target.
How much do healthcare / medical business owners actually make?
Owner earnings vary widely based on revenue, pricing, and operational involvement. This healthcare / medical business generates $832,000 in seller's discretionary earnings (SDE) before debt service. After SBA financing under the 80/10/10 structure, the buyer would take home approximately $404,337 per year. That post-debt figure is the number that actually matters for a financed acquisition, because it reflects what ends up in your pocket after every loan payment is made.