Acquisitions Anonymous - #1 for business buying, selling and operating Inside a Failing Rehab Acquisition: Utilization, Insurance & Red Flags
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Dec 13, 2025 The hosts dive into a $4.5M rehab facility acquisition, dissecting its $4M revenue and $1M SDE. They analyze declining utilization trends and question questionable future revenue assumptions. Lender risks and the importance of insurance versus private pay are examined, alongside the complexities of billing practices. Regulatory challenges related to corporate practice laws are debated, highlighting significant risk factors. Ultimately, the team concludes that this mid-market facility presents too many red flags for acquisition.
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Utilization Drop Masks Revenue Growth
- Utilization fell from ~78% to ~53% even as revenue rose, signaling structural changes behind growth.
- Forecasts that assume utilization will rebound to prior levels deserve heavy scrutiny.
Bill’s Small Rehab Investment
- Bill mentioned he invested a small amount in a rehab deal in Ohio to illustrate familiarity with the sector.
- That experience informs his cautious optimism about the industry's potential but not this specific listing.
Revenue Driven By Billing-Stacking
- Revenue per patient hinges on billing-code stacking across diagnoses and services.
- Expect mixed private-pay and insurance mixes within the same patient to distort top-line metrics.