Client Snapshot
- Program: Residential substance use disorder (SUD) treatment
- Size: 18 beds; about $1.7M in trailing-12-month revenue
- Engagement: Ongoing; Tyler Edgel, CPA, is the fractional CFO
- Situation: Profitable and growing on paper, with a falling cash balance, while ownership weighed expansion and structural changes
The Situation Before the Engagement
The income statement looked healthy, and profit was rising. The bank balance was moving the other way.
The Core Problem
Cash is not profit. The owners were weighing added capacity, real estate, and a change in ownership, and every one of those decisions depended on how much cash the program could actually support.
Why Behavioral Health CFOs Was Engaged
Based on the work described, the owners needed a forward view of cash and a financial partner for the program's major structural decisions.
What We Are Doing
Cash forecasting. A forward-looking cash forecast lets the owners plan around cash, not just profit.
Strategy advisement. We are a financial thought partner to ownership on major decisions.
Finance vendor management. We coordinate the finance-related vendors.
Real estate expansion analysis. We modeled the financial impact of a larger footprint before any commitments were made.
Recapitalization analysis and entity structure. We analyzed the capital structure during a change in ownership and helped realign the entity structure.
Results
| Result |
|---|
| Profit up 58% |
| Revenue per client up 20%+ |
| Capacity up 40% |
| Entity structure realigned |
These results reflect this client's experience during an ongoing engagement. Every program is different, and results vary.
What It Means for Operators
- A rising profit line can hide a falling cash balance. Forecast cash separately.
- Adding beds, buying or leasing property, and ownership changes all draw on cash. Model each one before committing.
- Growth works best on two fronts: more capacity and more revenue per client.
- Settle the capital and ownership structure before growing on top of it.
Principles Applied
These principles are drawn from the work described. They are not a claim that a formal method was used.
- Cash is not profit
- Grow revenue per client
- Model capacity before building
- Settle capital and ownership structure before growth
Start With a Free Financial Systems Audit
If your profit and cash are telling different stories, or you are weighing expansion or a change in ownership, start with a free 60-minute Financial Systems Audit with Josh Gardner.
Or call 435-429-2855.