Inside a Failing Rehab Acquisition: Utilization, Insurance & Red Flags

In this episode the hosts dive into a $4.5M, 12‑bed Los Angeles drug and alcohol rehab facility deal with $4M revenue and $1M SDE, unpacking utilization trends, regulatory risks (MSO/CPOM), and why it might not be a compelling acquisition as‑is. Business Listing – https://www.bizbuysell.com/business-opportunity/drug-and-alcohol-rehabilitation-facilities/2447669/ Welcome to Acquisitions Anonymous – the #1 podcast for small business M&A. Every week, we break down businesses for sale and talk about buying, operating, and growing them. Subscribe for more episodes: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1 Subscribe to our Newsletter: https://www.acquanon.com/newsletter Connect with us on Social Media: Twitter: https://twitter.com/acquanon LinkedIn: https://www.linkedin.com/company/acquanon 👋 Follow the Hosts Michael Girdley – Entrepreneur & investor. Twitter: https://twitter.com/girdley Bill D’Alessandro – CEO of Elements Brands. Twitter: https://twitter.com/BillDA Heather Endresen – SBA lending expert & advisor. Twitter: https://twitter.com/EndresenHeather Mills Snell – Small business investor & advisor. Twitter: https://twitter.com/thegeneralmills 💰 Sponsored by: Go High Level – The all-in-one sales and marketing platform built for agencies and entrepreneurs. Automate, manage, and grow your business at https://www.gohighlevel.com Tonnesen Accounting Services - Tonnesen provides full quality of earnings reports trusted by buyers, lenders, and brokers on over $500 million in deals each year. Fast, detailed, and affordable. Visit tonnesenaccountingservices.com or connect with Josh Tonnesen on LinkedIn for a free consult. In this episode of Acquisitions Anonymous, Bill D’Alessandro, Heather Endresen, Mills Snell, and Chelsea Wood break down a mid‑market drug and alcohol rehabilitation business in Los Angeles County listed for $4.5M with about $4M in annual revenue and $1M in SDE. The business operates two licensed detox and residential facilities with 12 beds, offers a spectrum of evidence‑based therapies (CBT, DBT, EMDR, family therapy), and maintains Joint Commission accreditation and DHCS licensing. While the model appears scalable with high‑margin services, the panel highlights concerning utilization trends and forecasting assumptions baked into the seller’s projections. Key Highlights: - Deal Specifics: 12‑bed rehab facility in LA County, $4M revenue, $1M SDE, $4.5M asking price. - Utilization Trends: Declining from ~78% to ~53% with optimistic future forecast that seems questionable. - Regulatory Risk: Corporate practice of medicine/state licensure complexity in California (MSO workaround concerns). - Payer Mix & Revenue Drivers: High average daily revenue per patient but mixed insurance/private pay impacts lender appetite. - Consensus Verdict: Thumbs down for this deal — regulatory friction, utilization risks, and mid‑market performance dampen attractiveness.