Turning a $21.8M Reported EBITDA Into a Defensible $30.2M Run-Rate Story
Project Mesa: a sell-side Quality of Earnings for a multi-site outpatient healthcare platform — six clinics across four states — preparing to go to market. Every adjustment traced, every diligence question anticipated before a buyer ever asked it.
+7.6% vs. FY2024, across six clinics and six revenue lines with no single site or line dominating the mix.
Up from a reported $21.8m, with every adjustment sourced, sampled, and segregated by who identified it.
$6.1m management add-backs, $0.1m net diligence-identified — the difference between a story and a bridge.
A Multi-Site Outpatient Platform, Preparing to Go to Market
Six clinics, six revenue lines, and a diversified payor base — the kind of platform a buyer will want to underwrite on more than a single consolidated number. MatrixMindz was engaged to build the sell-side QoE the deal team would stand behind at the negotiating table.
Reported-to-Adjusted EBITDA Bridge — TTM 3/31/2025
Every dollar of the $6.2m gap between reported and adjusted EBITDA is segregated by who identified it — and by how it was tested. That distinction is what a buyer's advisor checks first.
Adjustments are segregated by source; "concurrence" reflects procedures performed (inquiry and analytical review), not assurance. $ in millions.
From $28.0M TTM to a $30.2M Run-Rate Story
Run-rate items are inherently more subjective than historical adjustments — which is exactly why each one carries its own basis and its own buyer-side caveat.
20.3% margin · +7.9% vs. TTM Adjusted EBITDA
Buyer considerations: the de-novo ramp ($1.1m) is the largest item and warrants corroboration against post-period actuals; the terminated capitation contract has been removed from run-rate for a balanced presentation.
Revenue by Service Line — A Mix Shifting Toward Higher-Margin Ancillaries
No single service line exceeds ~42% of TTM net revenue — a diversified base that a buyer can underwrite without leaning on one clinical line.
TTM mix shown; FY23/FY24 splits are illustrative and directionally consistent with the shift toward higher-margin ancillaries noted below.
No Single Site or Payor Carries the Story
Limited site-concentration and a favorable payor shift toward commercial — two of the questions a buyer's advisor asks first.
Largest site (A) is ~28% of revenue; top-3 sites are ~65%. Site F (de-novo) is up 100%+ since FY23.
Commercial mix up ~3 points since FY2023 (44% → 47%) — supportive of rate quality and revenue durability.
Where the Profit Sits, and What's Actually Driving Growth
A blended contribution margin of ~43% of net revenue, with growth that's volume-led and supported by favorable rate and mix — not masked by acquisition.
Diagnostic imaging and the ASC are the highest-margin clinical lines and a growing share of the mix.
Organic growth predominates over inorganic; the capitation exit and ordinary churn offset ~$3m/year, consistent with a balanced bridge.
Gross-to-Net, and Where Denials Are Trending
Net revenue realization holding at ~46.7% of gross charges, with a denial trend that appears to be improving through the period.
Elevated vs. a ~5–9% benchmark and drifting up over the period — flagged for further reserve-adequacy review.
Recovered on appeal — roughly half of denials are front-end (prior-auth/eligibility) and addressable through process fixes.
Three Years of Reported Performance
Revenue up ~12% CAGR, gross margin stable near 48%, and reported EBITDA up 42% from FY2023 to TTM — before a single QoE adjustment.
Proof of Cash, a Proposed NWC Peg, and an Illustrative Equity Bridge
Our proof-of-cash procedures reconciled recorded revenue to bank deposits within ~0.3% of revenue. The proposed peg reflects a 12-month average, not a period-end snapshot.
TTM 12-month average.
vs. ~56 days FY2023.
Earnout, deferred comp, malpractice IBNR, deal costs.
What We Flagged for the Deal Team Before a Buyer Could
A QoE that only bridges to a number isn't finished. The value is in surfacing what a buyer's advisor will ask next — before they ask it.
Earnings Quality
Adjusted EBITDA of ~$28.0m (18.9%) is supported by the procedures performed; we recommended further analysis of the de-novo run-rate adjustment and the owner-compensation normalization.
Revenue Durability
Diversified across six service lines and six locations with a favorable commercial-payor shift; we recommended review of contract renewal and reimbursement exposure.
Cash & Working Capital
Proof-of-cash reconciled to bank activity; we recommended focus on receivables aging (DSO ~59 days) and the proposed ~$12.2m net working capital peg.
Net Debt
~$54.3m including ~$9.1m characterized as debt-like (earnout, deferred comp, IBNR, deal costs) — several classifications customarily subject to negotiation.
A Bridge a Buyer's Advisor Can Follow Is Worth More Than a Bigger Number
Every adjustment in this QoE is sourced, sampled, and segregated by who identified it and how it was tested — management add-back or diligence-identified, historical or run-rate. That structure is what lets a $21.8m reported number become a defensible $28.0m adjusted figure, and a credible $30.2m run-rate story, without losing credibility at the negotiating table.
Deal-grade rigor, built to withstand the other side's diligence — not just to produce a number for the teaser.
Build a QoE That Survives the Other Side's Diligence
If you're preparing a sell-side process and need a Quality of Earnings that a buyer's advisor will find credible — not just favorable — we'd welcome a conversation.