advertisement

Financing healthcare businesses

50 %
50 %
advertisement
Information about Financing healthcare businesses

Published on February 27, 2014

Author: chrislehnes

Source: slideshare.net

Description

One industry particularly impacted by the new credit reality is the home healthcare industry—a fast-growing industry of over 25,000 companies providing medical and caregiver assistance to patients in their own homes. The industry has taken off for several reasons: an aging population that wants to stay at home; an increased prevalence of patients requiring care for chronic disease; acceptance by physicians for home care; improved portable medical technologies; and a focus on cost-efficient treatments.
advertisement

2/26/2014 Financing Healthcare Businesses Borrowing-based Factoring for Home Healthcare Companies For small-business owners access to credit remains elusive. One reason is lenders reserve secured or unsecured business lines of credit for only their “best” customers—those with strong profits, increasing revenue trends, high balances on deposit and non-seasonal cash flow. New businesses, established businesses that are growing too quickly or businesses with seasonal dips, declining revenue trends or in default of loan covenants are regularly turned away from traditional bank financing. One industry particularly impacted by the new credit reality is the home healthcare industry—a fastgrowing industry of over 25,000 companies providing medical and caregiver assistance to patients in their own homes. The industry has taken off for several reasons: an aging population that wants to stay at home; an increased prevalence of patients requiring care for chronic disease; acceptance by physicians for home care; improved portable medical technologies; and a focus on cost-efficient treatments. Companies providing home healthcare technology solutions are also experiencing a boom. Not only have there been tremendous developments with portable technologies, but the increase of mobile applications and Internet-connected equipment has contributed to the legitimacy of home service as a viable alternative to hospitals, nursing homes or hospice. Alternative access to working capital Home healthcare companies are increasingly considering two financing options to grow business: factoring their accounts receivable or taking loans against their Medicare and Medicaid revenues. To factor a receivable, a business issues an invoice and the factoring company pays approximately 75%-80% of the customer’s amount due. Then, once the customer makes payment, the business receives the balance, less a factoring fee. Gibraltar takes a unique approach to factoring. Instead of the invoice-specific method of traditional factoring, our borrowing-based factoring operates like a line of credit. We aggregate all eligible invoices to create a borrowing base for our clients, allowing businesses to borrow what they want, when they want—and pay fees only on what they borrow. A capital case study in home healthcare Home healthcare companies, like many companies in the B2C service industry, are paid on net terms. One example is a New York-based company with $10 million in sales, growing revenues, and a seasonal cash flow that needed working capital to hire more staff, meet payroll and address cash-flow http://secure.campaigner.com/Campaigner/Public/t.show?6agu4--3drky-o2g4ed6&_v=2 1/2

2/26/2014 Financing Healthcare Businesses issues caused by the seasonal nature of the business. After being declined for a business credit line and small business loan, the ownership thought their only options were to raise money from private equity, pare down operations or sell the business. They did not want to give up a stake in the business and the latter two options were not viable—this was a growing enterprise. That’s when ownership turned to factoring, learning how the financing option could provide added liquidity to fund operations and grow the business. Even with factoring costs, the business has forecast increased profits due to a new capacity to generate more revenue. Before Factoring After Factoring Revenues $10,000,000 $20,000,000 Cost of Goods/Services Sold $6,500,000 (65%) $13,000,000 (65%) Gross Profit $3,500,000 (35%) $7,000,000 (35%) Variable Cost $1,000,000 (10%) $2,000,000 (10%) Fixed Costs $2,000,000 $2,000,000 Cost of Factoring N/A $1,000,000 Net Profit $500,000 (5%) $2,000,000 (10%) Not only is the home healthcare industry one of the fastest growing industries for employment, it has the potential to positively impact the quality of life for millions of people. Gibraltar is committed to work ing with business owners to secure work ing capital to grow their businesses. Find out more about how factoring with Gibraltar work s here. Or contact me: Chris Lehnes SVP, Loan Originations clehnes@gibraltarbc.com 203-304-9527 http://secure.campaigner.com/Campaigner/Public/t.show?6agu4--3drky-o2g4ed6&_v=2 2/2

Add a comment

Related pages

HealthCare Business Financing

We are a unique provider of small business funding solutions exclusively to medical and healthcare practitioners, and to the related businesses in the ...
Read more

Medical Business Financing for Healthcare Professionals

Seeking medical business financing? NBC can assist medical professionals in obtaining medical business loans, Apply today or request additional information.
Read more

Business Financing - Healthcare | National Bank

Focus Areas. We are proud participants in the development of the Quebec healthcare industry, and especially in the development of the following types of ...
Read more

Healthcare Financing Companies, Medical Capital | Business ...

Need Healthcare Financing? Business Capital specializes in healthcare financing. We provide medical capital to companies looking for working or acquisition
Read more

Financing Medical Offices, Nursing Homes, and Other ...

Financing Medical Offices, Nursing Homes, and Other Healthcare Businesses. by marco_terry. ... You can get conventional financing through banks, ...
Read more

Healthcare Business Financing - Small Business Funding

Healthcare business financing using Small Business Funding. Approvals in 24 hours and funding in just days. Bad credit accepted. Apply now
Read more

Financing Healthcare & Life Sciences Businesses | Linda ...

Financing Healthcare & Life Sciences Businesses Linda Smith. 9 Things That Destroy Successful Teams Bernard Marr Influencer. FDA nixes Theranos Zika test ...
Read more

Healthcare | Working Capital Cash

Healthcare Business Financing All small businesses require working capital to run their operations and become profitable. Healthcare businesses are no ...
Read more

Financial Services - Siemens Global Website

Financial Services is an international provider of ... and equipment as well with project and structured financing ... Financial Services; Healthcare;
Read more