Would You Buy This Healthcare SaaS? (Birth Tracking App)

0:00Welcome to Acquisitions Anonymous, the internet's best podcast about buying, selling, and owning small businesses. I am one of your co-hosts, Michael. Today's deal was myself and Heather going into a SaaS application that was running at 80 % net margins and targeting midwives and doulas. So this is as niche as niche gets. Stick around for the end to see how Heather and I felt about it. you may or may not be surprised. All right, here's the episode. We'll start Acquisitions Anonymous.

0:35Acquisitions Anonymous Hosts:Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. Thumbs down on just the plus inventory. Are you ready to take a leap into business ownership, but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker and Deibel, the lab is your fast track to success in the search diligence and acquisition process. With hands-on support, world-class resources, and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey.

1:09Acquisitions Anonymous Hosts:And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the acquisitions anonymous podcast sent you heather michael i can finally hear you so we got over our technical difficulties uh i uh flew back from spring break last night are you a little tired had the kids and we got to the atlanta airport and we had a connecting flight that was supposed to be easy 90 minute connection we get through customs do the whole thing and as we're starting to land i get the notification our flight is delayed by 206 minutes which would have been nice if it was only delayed by three hours and a half hours uh we got in so late to the san antonio airport last night that as we're walking out i'm like this place is packed the airport is packed in the middle of the night we're doing here because no it's we were so late that the people for the 5 a.m flights were showing up were going through security rushing to their gate.

2:26That's how late we were getting it. Oh, I'm sorry. I've heard so many travel nightmares this week, and I have to travel next week, so I'm already bracing for it. Are you going to ETA stuff for Viso? Yes, I am. It's not a conference this time. This time I'm going to the Harvard ETA classroom, which is always fun. Yeah, I do that once a year, so that's next week. I hope it stops snowing. Yeah, stop snowing. Well, our new QOV business, the CEO started today, Bedrock QOV. Awesome. So I got to figure out how to get him on the ETA circuit. Yeah. Have him talk to me. And the time just comes out, the announcement will happen.

3:07Awesome. Should be good.

3:10Acquisitions Anonymous Hosts:Should be good. All right. Since we're talking about ETA, let me tell you about something else you should be expecting. It is a HIPAA compliant birth tracking SaaS. This is the first time we've ever done a birth tracking. Birth tracking. All right. Let me pull this up and show it to you. It's from our friends at acquire.com. It is a HIPAA compliant birth tracking SAS for midwives and OBGYNs. It does 139 ,000 ARR with$97 ,000 in profit. Asking price is$400 ,000. So 4.1 times profit or 2.9 times revenue. Interesting. Yeah. It's not growing. Zero. zero percent growth rate you had me at hello all right trailing 12 months revenue is 140 thousand dollars profited 97 thousand dollars last month it did 13.1 thousand dollars and profited 8.3 thousand um i'm not a premium member i need to pay for acquire i'm i'm one of those 39 buyers are in active conversations and it's under guidance advisory from the acquire.com in-house team of experts.

4:21Located in California, this profitable, user-friendly birth tracking platform helps midwives, doulas, and OBGYNs log, analyze, and visualize birth data to improve patient care. Workflows are simple, reporting is clear, and all data is handled with HIPAA compliance safeguards. Operating since 2019, the business serves 100-plus paying customers on recurring subscriptions, is bootstrap, and runs lean. It's a strong fit for buyers seeking dependable cash flow in women's health with multiple ways to scale. So what does this app do? I guess if you are someone that works in the birthing field, a physician or a doula or midwife, you need something to keep track of your patients throughout their pregnancy.

5:06And this is doing that for you. I guess you'd put all your patients on your platform here and you'd get your updates. and every time you met with your client, you'd know exactly what week they're in and probably a place to put notes in, whatnot. And it's HIPAA compliant. I guess that's the most important part. If you're in healthcare and you're gonna use something like this, it has to be fully HIPAA compliant, and this one is. But their customer base is not the pregnant mothers, it sounds like, it is the healthcare providers that serve them. Yeah, so it's interesting. B2B subscription model has 100 to 250 active customers.

5:44So if we do the math, it says they have over 100 paying customers and they do 139 ,000 in ARR. So that means they're probably doing about$100 a month per customer. Yeah, like 130 is what I figured with$13 ,000 of revenue last month, you know, divide by 100. So$1 ,300 a month per doula or OBGYN or whatever the, you know, the clients are. 100 of those seems like a fair amount, but$13 ,000 of gross revenues, not a lot. It's pretty small. So my big competition here is the spreadsheet. Yeah, Excel. I think so. Vibe coding. Could you not go into Claude code and build this? If you know what you need to track, would this not be pretty easy to build?

6:32I guess maybe the HIPAA compliance part might be a little more. I thought you could vibe code this in a weekend. Yeah, I couldn't. We'll come back to that. Somebody smarter and younger than me could. So growth levers, they say, are new features, higher sales, new social media, and new markets. They are selling for lack of time, and they are starting a new venture. Over seven years of product maturity and loyal customers, owner is largely hands-off. A part-time team has run support, onboarding and daily ops for two and a half years. Strong, low overhead cashflow, clear upside via doula features, EHR adjacent workflows, integrations and strategic cross-sell.

7:18And again, they're asking 400 ,000 for it, which is 4.1 times profit or 2.9 times revenue. That is the greatest thing about SaaS. Sometimes you see these things where you're like, yeah, we're running at 70 % profit margins. It's like, okay, cool. Yeah. And they, I mean, they did say two things that were sort of conflicting there. They said that the owner is hands off, but is selling because they don't, they need more time for other things. It sounds like they're not spending any time in this, so I'm not sure. I, you know, like anything in this small app kind of space, they may be selling because they know it can be vibe coded now.

7:53And that's, you know, going to change the trajectory perhaps of this business, unless you do something different, maybe. Well, they've clearly struggled to grow. They have 100 customers, and they're not growing, which is why I guess, hence the conclusion that they're struggling to grow. And they say here you can add new features, higher sales, social media, do new markets. I guess, why haven't they done any of those things so far? Right. Right. And I've got to believe healthcare is such a tangled web of compliance and all kinds of other problems and things. I've got to believe that if you're an OBGYN, at least they have a system of tracking their clients through a pregnancy without buying a special app.

8:46Maybe a doula or a midwife might need something like this a little bit more, but I have a hard time believing there's not already some pretty good systems to do this. within healthcare. Yeah. Or just a spreadsheet. Right, or just a spreadsheet. Yeah. I mean, I'm involved with some companies where they have put together some ridiculously good charting, all operating within Google Sheets. Yeah. And macros. It's really cool. Yeah, I would think that could be done very easily here. So let's flip this. Let's say you bought this. Is there a way that you could grow this? and it seems like at$1 ,200 a year which is what they're charging each customer on average we're guessing$99 a month they're struggling to get business which is hard $1 ,200 for a niche SaaS is just a hard thing to try to grow but is there another way you could get eyeballs and get sales for this?

9:44I mean maybe I'm a one trick pony but it feels like going after the doula market and the birthing moms market would be a great kind of way to go do that. And like, I don't know, you could build a YouTube audience around that. I guess that's where I'm going on the whole thing. Yeah, like I think so. It needs some content and that appeals to pregnant moms who are always very excited to learn all they can about the stages of their pregnancy and that. I do think they are smart in that they didn't try to sell this as a B2C app because there's probably a million of those out there and it's even more of a red ocean.

10:25So it's better to go for the healthcare providers, the birthing providers, which yeah, if you went just doula, maybe drop the other stuff and just go with midwives and doulas and really customize it more for them with some content that could be interesting. Maybe there are some additional features that could be added. If you were going after the OBGYN market, it feels like you'd wanna sell this is more of an integration to existing healthcare platforms that are heavily used by that group. And that's probably a more challenging path than just building some content around midwives and doulas. I bet you there is, if you could figure out some way to get like the pregnant mom market, like excited about this and recommending it to their midwives and doulas, I almost think if there was like on YouTube, there'd be like birth stories.

11:21Like, I've never been a pregnant mom. Well, you haven't. That's okay. I have. I have been pregnant mom adjacent. Okay. That's good enough. But yeah, you're the expert here. Tell me why that's a terrible idea. Well, again, I think if we pulled up our app store right now and started searching for apps for pregnant moms, you'd probably find just scores of them of all different angles. And I think that's probably the problem. going B to C here, you know, it's probably just too competitive. And so going B to B is probably a little better, although obviously not a lot when they only have 100 customers after seven years.

12:03Yeah, and I think I'm only advocating for the B to C aspect to get them to recommend it to the doulas so you can like grow the doula and midwife market. So like you said, a content engine for that, maybe. Yeah, yeah. It's a one trick pony. I'd be like, oh, we should tell stories around this. They get viewed. And then you run ads and this stuff. And it turns out those ads work. Yeah, right. And you would have no shortage of interesting birth stories and people willing to tell them. Moms love to tell their birth story. Oh, I've heard them. Yes. Yep, you've heard them. We all, I mean, my kids are, you know, in their 20s and I could tell you their birth story with, you know, perfect clarity right now.

12:47after a couple of bottles of wine get drunk, you hear the word episiotomy with moms. It's just like, whoa, I didn't know we were going there. But after two glasses of Merlot, we ended up there. So here's the thing I don't understand about birthing moms. Husbands, men like myself, I sprained my thumb skiing a week ago. I am still whining about it. I've seen what women have gone through birthing children and women are just like, yeah, cool, whatever. Yeah. I don't even worry about it. Yeah. You forget it pretty fast.

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13:58Acquisitions Anonymous Hosts:You also get free coaching from people who have actually built and scaled franchise businesses. If you are exploring ETA and want to understand whether franchising fits your acquisition strategy, visit franzi.com. That's F-R-A-N-Z-Y.com. And thanks to them for sponsoring today's episode. The instinct, the desire to have children, to have a family is so much bigger than what you have to go through physically that you just get through it. Yeah. It's impressive. Yeah. Men are wimps. So how do you feel about the purchase price for this at four times? Too high for me, I guess, especially because I just don't, this, this is a lot of, someone's got to put a lot of sweat into this to make it into something that's sustainable.

14:40It's like in its current state, it feels very unsustainable. And so the only person that can really buy it is someone who's going to put the know-how, the content or whatever it is behind this to kind of make it something that can last. And I wouldn't pay four times to do that. I would pay four times for something that's got some stability already. But when it doesn't, I don't know that I'd want to pay more than one time. Well, I think that your fundamental concern is the app development tools that are coming out, Vibe Coding, Cloud Code, all this kind of stuff, is going to make something like this that is basically just a HIPAA-compliant spreadsheet with a different user interface on it that runs an app on either a website or somebody's device is just going to be easily recreatable.

15:29Like the technology disruption risk is real here. and the only reason maybe it hasn't is because it's only got a hundred users and it's not you know that people are going after things that are more exciting than that right now but it wouldn't take much to you know somebody spends a weekend and this is replaced yeah that's a huge problem yeah I wonder what the it says reason for sale lack of time and starting a new venture makes me wonder what are they what are they working on right they said they're hands off too so they're I just I think it's I think the reason is probably not I think it's probably concern that, you know, they didn't do enough with it.

16:06And maybe they just haven't been paying attention because they have other things going on and figure it's time to let somebody else try to turn this into something. Which is fine, but not at four times. So where would you price it? I mean, I'm going to sound like a cheapskate, but I'm like at one and a half times. Or just keep it. If it doesn't take you any time, just keep it and let it kind of bleed out. see how much cash flow you can make from that. I do think it would be really fascinating to try to figure out how to grow this. Yeah. Somebody that knows what they're doing probably could grow it.

16:39Or if they already are in this space somehow and they're, you know, they're doing something adjacent to this and this would be a really neat thing to add to what they've already got. Maybe it's worth it. But again, if they're tech savvy and they look at this app, they could say, do I want to spend four times on this or do I want to spend tens of thousands of dollars to vibe code it? I don't even know if you need to spend tens of thousands. Maybe not even tens. Ones. Zeros. There is a podcast that keeps showing up on my Facebook feed. Which, by the way, I'm on Facebook so it shows my age. So am I, so I'm with you.

17:21Hilariously, speaking of how different social networks cater to different ages, all of like the cycling clubs that i'm in except for one are on facebook because they're all run by like 50 people our age and then there's another one that's run by 35 year old guys and uh it's they only use instagram instagram yeah that's their thing yeah not funny but i think facebook does a better job of groups like you know affinity groups or you know interest groups or whatever i think does a good job of that i was reminded so on facebook there's a podcast that I see is this young British couple who is super transparent about what they're going through as people in their mid-20s being pregnant for the first time.

18:06What the wife's going through, what the husband's going through. And they're talking about the woman has lost all interest in intimacy since she got pregnant. So it's been like seven. It's been since she got pregnant that it's happened. And the poor guy, I feel so sad for him. He's just like, is there something wrong with me? And I'm like, I think that's what's wrong with you, bro. You look a little too whiny. Yeah, you're being too whiny over there. Yeah, stop whining. Nobody wants to make out with a whiner. But if somebody like that that's already got a channel that's talking about this kind of stuff and they add on, you know, here's our app and maybe add some cool features that kind of blend together.

18:53Sure, that would be interesting. That feels right. Like there's somebody could do something with that. Are somebody that's just like genuinely interested in the intellectual challenge of trying to grow something that feels really this difficult? Some people are like that. Some people do like a really difficult challenge. I'm not one of them, but there are people that like that. One of my relatives had a great line and he would say, I can think of easier ways to get rich. Yeah. Which is a good line, but he was also perpetually broke. It's always interesting thinking about that. Yeah, people that give advice that are about getting rich that are not.

19:33But I also look at it like, you know, you've only got so much, so many years of your life. Do you want to spend it doing something frustrating? It's not going to make you enough money to make it worth spending that much of your time. So I think it's always a balance, you know. Sure, don't make money, but go enjoy yourself and not beat your head against the wall not making money. That's not worth it. I mean, I think your business is doing incredibly well right now. Thank you. Yeah, it is doing great. I think it makes sense. That's why it's doing well. We're a win-win-win, I like to say, because we're a win for the banks because they get these really efficient deal flow that they want to see.

20:10We're a win for ourselves because we get a business around this, and we're a win for our clients because they get all this expertise, and they don't have to pay a fee. Our fees are paid by the bank, so it just makes sense. but there's just something to be and i think you're seeing and this is your first entrepreneurial venture it is i have a late in life entrepreneur which is a amazing but b having been in things where it's not with a bunch of tailwinds where things feel relatively easy and it's hard like like i think it's that's so cool like i'm glad you found something where you're not playing a hard game.

20:48No, it's not the hard game. It's great. It's great. It's fun. It's, it's really, uh, and you know, you're helping people change their lives, which is just added, you know, a lot of enjoyment to the whole thing. Uh, back to this deal. I wish it was like five times bigger. Yeah. It needs to be bigger to be interesting. It's not small enough to be the, Hey, here's a$25 ,000 business that somebody could do as a side hustle, but it's not big enough to where you're going to pick this up and be like, oh, this is something I'm going to be dedicating my life to. It's just like, as they said in The Wire, it's like a 45-degree day.

21:25It's not cold enough that anybody says anything about it, and it's not warm enough that people go out and picnic. And$97 ,000 in profit is real money, don't get me wrong, but it's also like, in this weird messy middle. I say$97 ,000. That's my offer. You'll give them$97 ,000? Let me click the button. Yeah. I had such high hopes for this thing. It's just like, it's a business. It didn't give us much to work with here. But they compete with mobile midwife, client care, and maternity neighborhood. Maternity neighborhood. Now that one sounds interesting.

22:04I don't know what happened. I mean, there is a whole world of stuff that caters to females and menopause and pregnancy. And it's just because there's just men have no clue. Like, we've been entrepreneurial about stuff and we're just like, we don't pay attention. Menopause neighborhood. I'll have to start that one up. Menopause neighborhood. That probably wouldn't be very fun, though. The world of menopause. Yeah, stuff. There's some stuff. But there has been a big explosion in menopause podcasts and stuff like that and products. I think it's great. People just didn't talk about it for centuries.

22:51It's just like, oh, you're no longer childbearing. You're invisible to us. It's just like, oh, this is horrible. Stupid society. Stupid society. I agree. All right, on that note, you're buying this one? for$97 ,000. One year of earnings.

23:11I have a pass. I had such high hopes. Maternity, birth wife thing. I thought it was cool. We took it into it was super boring. I hope they get what they want. Lack of time. That's why they're selling.

23:25Acquisitions Anonymous Hosts:I have lack of time to keep talking about this one. It's so boring. All right, everybody. Thanks for being here. We'll catch you next time.

23:39Thank you.