Stout was engaged by a middle-market private equity firm (the “PE Firm”) to assist a healthcare portfolio company (the “Company”) with utilizing a roll-up strategy and completing a number of acquisitions (the “Targets”) in the previous 12 months.

The Targets operated on different enterprise resource planning (ERP) systems for general ledger accounting (or no ERP system in some cases) and different electronic medical record (EMR) systems for revenue cycle management. Moreover, the Targets reported financial statements annually on a cash basis, prompting skepticism around the completeness, accuracy, and timing of information captured.

Stout collaborated with the Company to provide technical accounting, financial reporting, and finance integration support for the Targets upon close of the transactions and on a go-forward basis. The scope of work included:

• Reviewing expense methods and identifying any errors in U.S. GAAP compliance
• Developing key reconciliations and roll-forwards to assist with proper tracking of major expense line items
• Developing an approach for calculating and recording revenue in accordance with ASC 606
• Assisting the Company with accounting for the business combinations in accordance with ASC 805, including preparation of the Targets’ closing balance sheet, calculation of consideration transferred, and required purchase accounting journal entries
• Recasting financial statements on a basis consistent with U.S. GAAP
• Developing accounting integration playbooks to operationalize go-forward accounting processes for the Targets
• Building initial trial balances and financial statements for the Targets that did not utilize an ERP system
• Assisting the Company in the creation of a financial reporting package to help the PE Firm make key management decisions
• Advising the Company in the selection of an ERP system to operationalize general ledger accounting going forward

As a result of the engagement, the Company has gained insight into the Targets’ financial statements to reduce risk of misstatement, drive decision making, and provide insight to the PE Firm and key stakeholders.

Stout continues to be a trusted advisor and long-term integration partner, as the Company plans on acquiring more health clinics in the future.