NEMT Roll up?

January 15, 2025

by a searcher from INSEAD in Oakland, CA, USA

I'm getting interested in the NEMT (non emergency medical transportation) space. Dynamics appear favorable for a roll up strategy. Anyone have experience in this sector and willing to connect? Thanks in advance.

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Reply by a searcher
from Harvard University in Bellevue, WA, USA

I think these can be great businesses. I've looked at a few myself and see a lot of opportunity in the space. That said, there are two key areas I'd encourage you to think through: Demand origination: Who is driving the demand? Nursing homes, hospitals, individual patients? Understanding this is critical. How are those referral or customer relationships maintained, and what ensures you get the call versus a competitor? CapEx requirements: The vehicles are not cheap, and ongoing CapEx can weigh heavily on free cash flow, especially when you're maintaining a fleet of 20 vans. It's worth modeling this out carefully to understand the long-term impact on cash generation.

Reply by a searcher
from University of Maryland at College Park in Havre De Grace, MD 21078, USA

^redacted‌ while you can put heavy mileage on the first line when initially placed in service, generally the operations leader would rotate the vehicles in a way where less mileage is placed on them on a per year basis as they age. The depreciation (unless you do bonus) is generally 5 years but the vehicles can be in service longer or even used as parts vehicles after that point. More mileage also should be indicative of better per trip revenue for ambulances as the loaded mileage usually is reimbursed.

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