Dental Practice Y783 – South East Kansas
This successful general family dental practice has been operating in the south-east Kansas community it serves for over 35 years. The Owner and Dentist is nearing retirement and has consequently been reducing their hours of operation and is now currently practicing on a limited basis offering limited, basic dentistry procedures 3½ days per week. The business offers general dentistry procedural services at this practice which includes; cleanings, extractions, restorative fillings, crowns and bridges, dentures, partials and restorative procedures for implants. Other dental services include; some pediatric dentistry, cosmetic dentistry and preventative procedures (like x-rays, fluoride treatments, exams, sealants, etc.). The owner is looking for a quick sale and will accept a discounted offer due to their desire to retire within the next 6 months. They are willing to stay on to mentor and help transition the business to a new owner for an agreed upon time. Other services offered on a limited basis include oral surgery, orthodontics and endodontics. The current patient base of over 1,250 clients (active files per the owner) with an average 10 new patients per month coupled with a more than 85% customer retention rate, ensures a new owner has a stable income stream with distinct room for growth. Increased business in terms of volume, higher dollar procedures and operating additional days and hours will create opportunity for growth. Besides the dentist, the practice currently employs another 4 full-time support staff; two hygienists and two dental assistants / receptionists. This three-operatory general practice, two of which are for the doctor’s use and 1 for hygiene, also includes one lab/sterilization room, a reception area / waiting room, a business office, a private doctor’s office, break room and 2 restrooms. The real estate and facilities (2 story building) are owned by the owner who would prefer that these assets transfer with the business which includes a 2,400 square feet office space on the first floor and unoccupied equivalent space on the 2nd floor (currently used for storage). Approximately 1,600 square feet in the office is currently being utilized by the practice, implying that another operatory could easily be added for growth. The sale would include all of the assets, equipment, supplies and a well-established patient list. The practice utilizes Gendex radiography and Eagle Soft software for scheduling and billing. Other equipment includes; dental chairs and dental lights. Currently the practice delivers almost $400K in gross revenues (2013) or an average of around $95K per employee and roughly translating to about an average annual bill of $320 per patient, in-line with industry trends. Historically net profit / retained earnings to the business, after a dentist salary, has been >$60K, representing a profit margin of +15% which is slightly less than industry averages of 18%. This is partly due to the owner recently starting a 401-K profit sharing retirement plan for him and his wife. Annual discretionary cash flow earnings to a single new owner, i.e. adjusted EBITDA, is estimated to be more than $150K (before any new owner compensation / remuneration), sufficient for a new outright owner to service any debt financing. The estimated value range of this practice from operations is between $150K and $260K (excluding cash, receivables, inventory, liabilities and facilities).
* Adjusted EBITDA = EBIT plus Depreciation and Adjustments (excluding Owners compensation)