# Blue Agave Functional Medicine PLLC
# 2025 Annual CFO Report

**Prepared for:** Blue Agave Functional Medicine PLLC
**Period:** January 1 - December 31, 2025
**Basis:** Accrual
**Prepared by:** J2 Bookkeeping

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## Executive Summary

Blue Agave Functional Medicine PLLC had a breakout year in 2025. The clinic generated **$3.66 million in revenue** and delivered **$1.52 million in net income** -- a **41.4% net margin**. This is an exceptionally strong performance for a single-location medical practice.

The story of 2025 is one of aggressive scaling. Comparing Q1 to the Q2-Q4 run rate, the clinic roughly tripled its quarterly revenue over the course of the year while investing heavily in staffing, facilities buildout, medical supplies, and billing infrastructure. Despite that investment, the practice maintained healthy profitability throughout.

**Key highlights:**
- $3.66M total revenue, driven by insurance payments ($2.94M) and office collections ($717K)
- $1.52M net income (41.4% margin)
- Significant facility investment: $66K in construction/buildout, rent scaling from ~$5K/quarter to ~$22K/quarter
- Payroll scaled to $799K as the team grew substantially
- Medical supplies (including pharmaceuticals and skin grafts) totaled $575K -- the largest non-payroll expense
- Year-end cash position: $540K with $245K in total liabilities
- Partner equity draws of $1.18M reflect the owners taking distributions against strong earnings

**Areas to watch:**
- Accounts payable spiked to $116K at year-end -- ensure timely vendor payments
- A closed credit card account (BAFM LLC 9245) carried a $51K balance at year-end -- fully paid off in Q1 2026
- Operating margin compressed as the clinic scaled (Q1 at 57.5% vs full-year 41.4%) -- normal for growth but worth monitoring as the clinic stabilizes

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## Profit & Loss -- Full Year 2025

### Revenue

| Category | 2025 | % of Revenue |
|----------|------|-------------|
| Insurance Payments | $2,935,054 | 80.3% |
| Office Collections | $716,784 | 19.6% |
| Other Services | $3,802 | 0.1% |
| Supplement Sales | $1,657 | <0.1% |
| **Total Revenue** | **$3,657,298** | **100%** |

**Insight:** The clinic is heavily insurance-driven (80% of revenue). Office collections at 20% suggest a meaningful cash-pay or copay component. The 80/20 insurance-to-collections ratio is typical for a functional medicine practice that accepts insurance.

### Expenses by Category

| Category | 2025 | % of Revenue | Notes |
|----------|------|-------------|-------|
| Payroll (wages, taxes, benefits, contractors) | $799,002 | 21.8% | Largest expense -- includes $682K wages, $56K taxes, $48K contractors |
| Medical Supplies & Pharmaceuticals | $574,533 | 15.7% | Includes $279K pharma, $185K supplies, $105K skin grafts |
| Office Expenses (incl. buildout) | $209,805 | 5.7% | Includes $66K construction, $58K software, $68K office supplies |
| Billing Fees | $148,535 | 4.1% | Third-party billing -- scales with revenue |
| Advertising & Marketing | $107,972 | 3.0% | $47K marketing team, $46K social media |
| Rent | $72,004 | 2.0% | Ramped significantly mid-year |
| Employee Benefits | $59,088 | 1.6% | Health insurance + other benefits |
| Medical Services (radiology, etc.) | $49,913 | 1.4% | Radiology reading fees primary driver |
| Meals & Entertainment | $18,337 | 0.5% | |
| Supplement Inventory | $18,466 | 0.5% | |
| Commissions & Fees | $18,795 | 0.5% | |
| IT | $17,531 | 0.5% | |
| General Business / Other | $47,299 | 1.3% | Insurance, legal, licenses, utilities, misc |
| **Total Expenses** | **$2,141,080** | **58.5%** | |

| **Net Operating Income** | **$1,516,217** | **41.5%** | |
|--------------------------|----------------|-----------|---|
| Other Income / (Expenses) | ($206) | | Insurance claims offset by vehicle expenses |
| **Net Income** | **$1,516,012** | **41.4%** | |

### Quarterly Revenue Trending (Estimated)

| Metric | Q1 2025 | Q2-Q4 2025 (combined) | Q2-Q4 Quarterly Avg |
|--------|---------|----------------------|---------------------|
| Revenue | $573,594 | $3,083,704 | $1,027,901 |
| Expenses | $243,662 | $1,897,418 | $632,473 |
| Net Income | $329,932 | $1,186,080 | $395,360 |
| Operating Margin | 57.5% | 38.5% | 38.5% |

**Insight:** The clinic's quarterly revenue nearly doubled from Q1 to the Q2-Q4 average ($574K to $1.03M). The margin compression from 57.5% to 38.5% reflects the fixed-cost investments (rent, payroll, buildout) made to support growth. This is expected during a scaling phase.

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## Balance Sheet -- As of December 31, 2025

### Assets

| Category | 12/31/2025 |
|----------|-----------|
| **Cash & Bank Accounts** | **$539,836** |
| - SSBT Checking (0421) | $293,656 |
| - Wells Fargo (5247) Checking | $243,501 |
| - SSBT LLC Account (7043) | $2,679 |
| **Other Current Assets** | **$54,906** |
| - Inventory | $20,964 |
| - QB Tax Holding | $33,330 |
| - Intercompany Receivable | $50 |
| - Loans to Officers (Scott) | $563 |
| **Fixed Assets** | **$40,184** |
| - Long-term office equipment | $32,384 |
| - Tools & equipment | $7,800 |
| **Other Assets** | **$496** |
| **Total Assets** | **$635,423** |

### Liabilities

| Category | 12/31/2025 |
|----------|-----------|
| **Accounts Payable** | **$115,503** |
| **Credit Cards** | **$52,215** |
| - BAFM LLC CLOSED 9245 | $51,006 |
| - AmEx | $1,014 |
| - Chase | $195 |
| **Other Current Liabilities** | **$76,860** |
| - Payroll Liabilities | $73,429 |
| - Direct Deposit Payable | $3,432 |
| **Total Liabilities** | **$244,578** |

### Equity

| Category | 12/31/2025 |
|----------|-----------|
| Opening Balance Equity | ($624) |
| Owner Equity (Partner Draws) | ($1,180,105) |
| - Scott Knepper | ($545,105) |
| - Troy Green | ($635,000) |
| Retained Earnings | $55,562 |
| Net Income (2025) | $1,516,012 |
| **Total Equity** | **$390,845** |

### Key Balance Sheet Metrics

| Metric | 12/31/2025 |
|--------|-----------|
| Current Ratio | 2.43x |
| Working Capital | $350,164 |
| Cash as % of Assets | 85.0% |
| Debt-to-Equity | 0.63x |
| Total Partner Draws | $1,180,105 |

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## Key Performance Indicators

| KPI | 2025 |
|-----|------|
| Total Revenue | $3,657,298 |
| Net Income | $1,516,012 |
| Operating Margin | 41.5% |
| Net Margin | 41.4% |
| Payroll as % of Revenue | 21.8% |
| Medical Supplies as % of Revenue | 15.7% |
| Billing Fees as % of Revenue | 4.1% |
| Marketing as % of Revenue | 3.0% |
| Cash on Hand (12/31) | $539,836 |
| Current Ratio | 2.43x |
| Days of Cash on Hand (approx) | ~92 days |

---

## Observations & Recommendations

### 1. Outstanding Growth -- Protect It
The clinic scaled from a ~$574K quarter to a ~$1M+ quarterly run rate within a single year. That kind of growth requires deliberate management. **Recommendation:** Establish a 2026 budget now to set expectations and track whether growth is outpacing the cost structure.

### 2. Accounts Payable -- $116K at Year-End
AP jumped to $116K. If this represents timing (e.g., December invoices paid in January), it is fine. If vendors are being paid late, it creates relationship risk. **Recommendation:** Review AP aging and confirm all balances are current.

### 3. Closed Credit Card Balance -- $51K (Resolved)
The "BAFM LLC CLOSED 9245" account carried a $51K balance at year-end. This was fully paid off in Q1 2026. **Recommendation:** Remove this account from the chart of accounts to keep the books clean.

### 4. Partner Distributions -- $1.18M
Combined partner draws of $1.18M are substantial relative to the $1.52M net income (78% payout ratio). While the clinic can support this, it leaves limited retained capital for reinvestment. **Recommendation:** Discuss a target draw/retain ratio (e.g., 60/40) to build operating reserves, especially given the growth trajectory.

### 5. Billing Fees -- 4.1% of Revenue
At $149K, billing fees are a meaningful cost center. As revenue grows, evaluate whether this percentage is competitive for a third-party billing arrangement. **Recommendation:** Benchmark against industry norms (typically 3-7% for medical billing) and review the billing contract terms.

### 6. Build a Cash Reserve
With $540K in cash and strong profitability, the clinic is in a good position to formalize a cash reserve policy. Medical practices typically target 2-3 months of operating expenses. At the current run rate (~$178K/month in expenses), a 3-month reserve would be ~$535K. **Recommendation:** The current cash position just barely meets that threshold -- prioritize maintaining this level.

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*Note: The closed credit card account (BAFM LLC 9245) showing $51,006 at 12/31/2025 was fully paid off in Q1 2026.*

*Report prepared by Finn (FP&A) -- J2 Bookkeeping*
*Data source: QuickBooks Online -- Blue Agave Functional Medicine PLLC*
*Accrual basis -- April 27, 2026*