$40 million? I wonder what their volume was?
My estimation is as follows:
1-The purchase price must have been between 6-7 time the EBITDA (earning before interest, taxes, depreciation and amortization). I presume this because
a-the year of sale, 2007 was about the peak of bubble before stock market crash.
b-Caris purchased this as their flagship Lab
c-It is unusual for a purchase to be all cash, therefore, either the multiple must have been toward the low range or Caris must have thought very highly of Lab
2-The usual derm lab's ebitda is between 50 to 65% of the net gross revenue.
3-I do not know the insurance mix nor reimbursement schedule in Boston area, however, I would presume an average net gross revenue of 100.00 per bottle (including, special stains). I could be wrong on this assumption.
4-Given the foregoing, the math (for sale price of 80 million) would work out as follows
a- the best sale price scenario of 7 times ebitda + ebitda = 65% + 100.00 per bottle, would give an annual volume of 176K bottle or biopsies,
b-the worst sale price scenario of 6 times ebitda + ebitda = 50% + 100.00 per bottle, would give an annual volume of 267K bottle or biopsies
c-the mid range amount would be 221K bottles.
5-since a dermatopathologist in a commercial lab usually does 20k-25k per year, the above figures would agree with another poster's information that the lab had 8-10 pathologists.
). A relative increase of that size will play hell with equilibrium dynamics, a point I made as a resident in a dermatology workforce symposium at the AAD... right before being scolded as a child and instructed to sit down by some asshat program director who shall remain unnamed.
