Exit-readiness checklist for medical supply and DME distributors

Buyers will audit your payer mix, accreditation and referral sources. Get there first with this checklist.

This checklist reflects what buyers and their diligence teams commonly review when acquiring a durable medical equipment (DME), home medical equipment (HME), respiratory, orthotics and prosthetics, mobility or med-surg supply business. Use it to find gaps 12 to 24 months before you plan to sell. It is not legal, tax or reimbursement advice; work through the regulatory items with your healthcare attorney and accountant.

1. Financials buyers can trust

• Monthly profit and loss statements and balance sheets for at least the last three years, closed on a consistent schedule.
• Revenue that reconciles to your billing system and to tax returns, by payer and by product category.
• Owner compensation, family members on payroll and one-time expenses clearly identified, so earnings can be normalized.
• Accounts receivable aging by payer, with write-offs and denials explained.
• Inventory and rental-fleet records that match the books, including how rental equipment is tracked and depreciated.

Many owners commission a quality-of-earnings style review before going to market. It finds the questions a buyer's accountants will ask, while you still have time to fix them.

2. Payer mix and reimbursement exposure

• A clear breakdown of revenue by Medicare, Medicaid, commercial payers, workers' compensation and cash.
• Current payer contracts, renewal dates and any assignment or change-of-control provisions.
• An honest view of how fee-schedule changes or contract losses would affect margin.
• For Medicare products: which of your product categories and markets could be affected by competitive bidding.

The CMS Round 2028 competitive bidding timeline

CMS has published the timeline for Round 2028 of the DMEPOS Competitive Bidding Program. According to CMS, bidder registration opens December 1, 2026, the bid window runs from January 5, 2027 to March 10, 2027, and contracts are scheduled to take effect January 1, 2028. CMS notes these are target dates. See the official CMS Round 2028 timeline for current dates.

You don't need to predict the outcome. You do need a documented view of your exposure and your plan, because buyers will ask.

3. Accreditation, enrollment and compliance

• Current accreditation from a CMS-approved accreditation organization for every location and every product category you bill.
• Medicare enrollment, surety bond and state licenses current, with renewal dates tracked.
• Records of past audits, reviews, overpayment demands and how each was resolved.
• A documented compliance program: policies, staff training, and checks of employees and vendors against federal exclusion lists.
• Patient files and delivery documentation that would hold up if a buyer's team sampled them.

CMS requires DMEPOS suppliers that bill Medicare to obtain accreditation from a CMS-approved organization, enroll as a supplier and post a surety bond. See CMS: Enroll as a DMEPOS supplier. Because enrollment and accreditation are tied to the legal entity and its locations, deal structure (asset sale versus stock sale) affects what transfers and what must be redone. Plan this with counsel before you choose a buyer.

4. Referral sources and recurring revenue

• Revenue ranked by referral source (physicians, hospitals, discharge planners, facilities), showing concentration.
• Relationships with top referral sources held by more than one person on your team.
• Resupply programs and rental revenue tracked separately, with retention and refill rates.
• Documented intake and order-to-delivery workflow that does not depend on the owner's personal follow-up.

Recurring resupply and rental revenue is usually more attractive to buyers than one-time sales because it continues without new selling effort. Show it clearly.

5. Team, systems and owner dependence

• An organization chart with named owners for billing, intake, delivery, compliance and sales.
• A second-in-command who can run daily operations.
• Written procedures for the ten processes that matter most to cash flow and compliance.
• Billing, inventory and CRM systems a buyer can see and measure.
• Evidence that the business performs when you step away.

Read more about why this matters for price and terms in How owner dependence affects business value.

6. US and Canada differences

United States: Medicare enrollment, accreditation, surety bonds, state licensing and payer contracts all transfer differently depending on deal structure.

Canada: funding programs and vendor rules are provincial. In Ontario, for example, the Assistive Devices Program has its own vendor requirements. Buyers will review program approvals, health-authority contracts and private-insurer relationships province by province.

7. Confidentiality before you start

• Decide who on your team will know, and when.
• Never list the business publicly; share details only after an NDA.
• Prepare a short, consistent explanation in case referral sources or staff ask questions.

8. Questions to answer before your first buyer conversation

Buyers form a first impression quickly. Owners who can answer these questions clearly, with documents to back them up, tend to keep control of the process:

1. What share of revenue comes from each payer, and how has that changed over the last three years?
2. Which product categories drive gross margin, and which are most exposed to reimbursement changes?
3. Who are your top ten referral sources, and who on your team manages each relationship?
4. When were your last accreditation survey and payer audits, and what were the findings?
5. How much revenue is recurring (resupply and rental), and what are your retention and refill rates?
6. If you were unavailable for a month, who would run billing, intake, delivery and compliance?
7. What would you want your role to be after closing, and for how long?

That last question matters more than many owners expect. Your goals for timing, involvement after the sale and your team shape which buyers fit and how a deal should be structured.

How to use this checklist

Mark each item green (ready), yellow (partly ready) or red (not started). Most owners find two or three red areas, and those become the first priorities. Our Exit-Readiness Scorecard gives you a quick overall read, and our medical supply and DME page explains how we help. When you want a second opinion, book a confidential 15-minute call.

This article is general information, not legal, tax or investment advice.