Should searchers avoid traditional non-emergency medical transport?

searcher profile

January 23, 2020

by a searcher from University of Virginia-Darden - Darden School of Business in Washington Metropolitan Area, USA

I am currently evaluating a non-emergency medical transportation company that seems to hit most of my search criteria. Fragmented and growing industry, EBITDA north of $1 million, net profit margins north of 10% (company I'm evaluating has been sitting between 35 and 40%), low customer concentration, B2B services, healthcare services, recurring revenue, etc... but upon further research into the industry, it appears they are in the process of being somewhat disrupted by Uber and Lyft, who are desperately trying to increase revenue streams following recent IPOs. And a change in state by state medicaid regulations has also presented uncertainty.


I'm curious to hear from others, if this is an industry you are avoiding as a result, or if you still see opportunity here.

Inquiring minds...

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commentor profile
Reply by a searcher
from Rice University in San Diego, CA, USA
The key thing to understand here is the difference between a transportation broker (arranges transportation - Uber, Lyft) and a transportation provider (actually owns/operates the vans). The Uber/Lyft threat is really aimed at the brokers - and it's likely that Uber/Lyft could only realistically enter through acquisition (not unlike the recent Uber Freight / Transplace deal). Modivcare [https://investors.modivcare.com/investors/default.aspx] is a public NEMT broker, so that is an example of a possible target for Uber/Lyft.

As a boots-on-the-ground provider, you do not always have to work with a broker (although this may vary by state guidelines). Brokers can offer greater volume, but also typically pay less than working directly with a client. So, the Uber/Lyft threat is more indirect here and could lead to lower margins for providers.
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Reply by a searcher
in 1335 6th Ave, New York, NY 10019, USA
Huge positive tailwinds in the industry and insurers and providers are beginning the recognize the impact of transportation on health. Market size is big and the volume of patients who miss appts b/c of lack of transportation creates $$ incentive for providers. Alternatively, significant competition is beginning to emerge for a relatively undifferentiated service, scale matters and uber/lyft/etc can undercut on prices. 3 year horizon is probably fine but in 10 years there will probably only be couple dominant players and winning business will be challenging.
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