Clinica del Valle Medical Group, PSC | Professional Services Corp | Valuation Date: December 31, 2025 | Standard: Fair Market Value1
AXIS Independent Advisory was retained to provide a calculation of value of 100% of the ownership interests of Clinica del Valle Medical Group, PSC ("the Company"), a multi-physician general medical practice operating in Ponce, Puerto Rico. This engagement was performed under NACVA Professional Standards and AICPA SSVS No. 1 as a Calculation of Value for internal succession planning purposes.
The Analyst considered the market, income, and asset-based approaches, and applied the market approach using comparable transaction data from market transaction databases. The basis for the approaches applied and not applied is set out in the Valuation Conclusion. The SDE Multiple Method received 70% weighting based on 6 selected comparable transactions (observed median 1.85x SDE). The Revenue Multiple Method received 30% weighting as a corroborating indicator.2 Historical financial data for fiscal years 2021 through 2025 was analyzed, with normalizing adjustments applied to reported earnings to reflect the economic benefit available to a single owner-operator.
The sections that follow provide the detailed analyses, data, and rationale supporting this conclusion.
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| Line Item | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $1,820,000 | $1,950,000 | $2,080,000 | $2,150,000 | $2,210,000 |
| Cost of Services | $728,000 | $780,000 | $832,000 | $860,000 | $884,000 |
| Gross Profit | $1,092,000 | $1,170,000 | $1,248,000 | $1,290,000 | $1,326,000 |
| Gross Margin | 60.0% | 60.0% | 60.0% | 60.0% | 60.0% |
| Operating Expenses | $765,000 | $810,000 | $852,000 | $885,000 | $910,000 |
| Net Income | $327,000 | $360,000 | $396,000 | $405,000 | $416,000 |
| Adjustment | Amount | Rationale |
|---|---|---|
| Reported Net Income | $416,000 | Per Form 1120-S, FY2025 |
| + Owner/Physician Compensation | $185,000 | W-2 salary + K-1 distributions to principal physician |
| + Depreciation & Amortization | $32,000 | Non-cash. Per Form 4562.3 |
| + Interest Expense | $8,000 | Equipment financing. Buyer decision. |
| + Personal/Discretionary | $14,000 | Personal vehicle, cell phone, travel per GL detail |
| + Non-Recurring Items | $22,000 | FY2025: one-time EHR system migration costs5 |
| + Rent Adjustment | $6,000 | Related-party lease below market ($3,500/mo vs. $4,000/mo est.)4 |
| Normalized SDE | $683,000 |
The normalized SDE of $683,000 for fiscal year 2025 was selected as the representative benefit stream, reflecting the Company's current operating performance and steady revenue growth over the analysis period.6
Consistent with NACVA Professional Standards, all three generally accepted approaches to value were considered. The approaches applied, and the basis for excluding those not applied, are set out below.
| Approach | Applied | Basis |
|---|---|---|
| Market Approach | Yes — primary | Adequate transaction data available for comparable owner-operated practices; directly observable pricing evidence. |
| Income Approach | No | Management did not prepare forecasts, and historical earnings do not support a reliable projection independent of the current owner-physician. A capitalized-earnings indication would restate the same benefit stream already captured in the SDE multiple.7 |
| Asset-Based Approach | Considered — not weighted | Applied as a reasonableness check only. Adjusted net asset value is materially below the earnings-based indications, consistent with a going-concern practice whose value derives from earnings rather than tangible assets. Not appropriate as a primary indication under a going-concern premise. |
| Method | Indicated Value | Weight | Weighted Value |
|---|---|---|---|
| SDE Multiple Method (1.68x) | $1,147,440 | 70% | $803,208 |
| Revenue Multiple Method (0.52x) | $1,149,200 | 30% | $344,760 |
| Weighted Indication of Value | 100% | $1,147,968 |
The SDE Multiple Method received 70% weight based on a set of 6 transactions in NAICS 621111 (Offices of Physicians) meeting the screening criteria described in the Comparable Transactions exhibit. The selected multiple of 1.68x falls below the observed median of 1.85x, reflecting the Company's owner-physician dependency, limited management depth, and Puerto Rico-specific geographic risk factors.8 The Revenue Multiple Method received 30% weight as a corroborating indicator; it is weighted lower because revenue multiples do not capture differences in margin structure between the subject and the comparable set.
No discount for lack of control (DLOC) was applied because the subject interest is a 100% controlling interest. No separate discount for lack of marketability (DLOM) was applied because the selected multiples derive from completed sales of whole, privately held practices, in which limited marketability is already reflected in the observed transaction pricing. Applying a further DLOM would double-count that factor.9
(Rounded to reflect the imprecision inherent in the valuation process.) This is a Calculation of Value performed under NACVA Professional Standards using approaches and procedures agreed in advance with the client. It is not a Conclusion of Value, and a Conclusion of Value may have differed had one been performed.10
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