Website Closers® presents a 76 Year, Renowned Brand in the Book Distribution Vertical, focusing primarily in the area of Health Science Textbooks. Books are distributed from over 400 Publishers to Medical & Nursing Schools, Colleges & Universities, Hospitals and Healthcare Systems, Libraries, Resellers such as Amazon, and the US Government. The company has two (2) delivery methods – its traditional print distribution business, which currently represents the bulk of its mix, and its growing digital platform for eBooks, which is the most exciting opportunity for the next 75 years of this company’s growth.
Health Science is a broad-stroke vertical dealing with many disciplines associated with human and animal healthcare. It is the application of technology, math, engineering and science to healthcare that makes up the field. This company has been in the Health Sciences for decades and is by far the largest publisher of Health Science books in the country.
The Digital Library offers thousands of Health Science eBooks from leading STM publishers. With one of the most extensive selections of notable titles, the business has the content essential to the modern health science library. These high-yield and focused eBooks are carefully sourced to provide the specialized content demanded by health science collections.
Over $2.2 Million has already been invested to develop the Digital side of the business to develop a New Digital Platform. More development is needed, but when it’s ready, it will be well situated for massive growth backed by a 76-year- old brand with all the connections necessary in the industry.
The Digital Platform will provide access to Health Science and Medical information in all formats, streamlining content ingestion and utilizing a powerful search database backed by MESH. A proprietary ingestion tool has been built for this company, thus allowing data from all of the company’s massive library to be ingested, and thus, topic-driven terms are tagged within the content making them searchable by users. The platform’s powerful search engine then cross-references medical terms allowing disparate types of information to be normalized, and topic driven.
This ingestion engine reduces costs for the company and its publishing partners. Most importantly, it enables access to high-quality scientific, technical, and medical materials all in one place for those studying these sciences. Even more exciting is the fact that it brings together content from multiple sources into one powerful database that would be difficult for others in the space, thus creating a competitive moat to support this business for many decades to come. The goal: providing an answer to a medical question without having to search extensively, when, and how you want it.
eBooks on the platform are purchased individually, allowing librarians to build meaningful anthologies one title at a time. Upon purchase, eBooks are immediately accessible and remain within a collection for the life of the edition and beyond via archived content. Suitable for collections of all sizes and specialties, the digital library is fully customizable for any health science library.
As a web-based platform, the technology offers seamless eBook access on desktop computers, laptops, tablets, smartphones, and web-capable eReaders. The extensive image library, deep linking, and integrated drug information enhance the end user’s experience. The user interface is optimized for the health sciences, and eBooks are easily integrated into any collection.
But the key … this technology is built for Health Sciences but it is scalable into many other fields. Once the foundation is fully built out and libraries and staff are comfortable with the platform, adding new books and publishers in other fields is a relatively simple task.
The history of this company stems from its Health Science Print Books Distribution. It has and continues to drive the majority of sales for this brand. In the print business, books are sold at a discount to the retail price. Pricing is generally dictated by the publisher and industry norms. The discount depends on the type of institution and is the same for all customers in each niche.
Contrarily, some eBooks have a pre-determined price set by the publisher, and others work on a split of revenue that the publisher will receive upon a sale. Those without stipulations are priced at what management believes is competitive. In addition to book sales revenue, the company charges a maintenance fee to libraries, which is effectively a fee for access to the platform. That cost is between $400 and $1,200 annually.
The company’s primary competitors are the Book Publishers themselves. For decades, all the major publishers have sold directly to the same customer base as this brand does. However, the value proposition that this company brings to College Bookstores and others is that it aggregates over 400 publishers, and with one call or contact form, they can get whatever health science textbook content that they need without having to spend hundreds of hours going through all of the individual publisher’s offerings. Our research has shown that there is only one other distributor of health science textbooks in the US, and they appear to represent less than 30% of this company’s sales.
For most companies in any distribution business, the purchasing and storage of goods can represent a substantial risk profile on working capital and cash flow. Not so for this company, or the customers it serves.
This business gives its customers the ability to return all unsold books for full credit, making their book buying risk-free. Additionally, this company has the ability to return textbooks it has ordered to its publishing vendors for full credit, thus also a low-risk investment. Even when a book goes out of print, this company has the right to return those now unsellable books for full credit to the publisher.
This industry-wide practice started during the Great Depression when schools could not afford to buy textbooks for their students. Publishers agreed to send books to the schools and then schools could return what they didn’t sell, paying only for books sold. This practice continues today – nearly 100 years later. As a result, returns for this company are roughly 25% of book shipments, but the risk of unsold books growing dust on the shelves is not present.
The accounting side of this relationship is important to note as well. The company uses LIFO inventory accounting, which can save a buyer significant tax dollars, especially in a high inflationary environment like we have today. Last year, for example, LIFO accounting reduced the owner’s taxable income by almost $300,000 and since inception has lowered the owner’s taxable income by $3.7 million.
The business experiences some significant peaks throughout the year based on the audience type. Universities generally purchase books from November to January and July through August for each semester. College bookstores have the right to return unsold books, and the business, therefore, expects some returns in March and October.
The digital business, on the other hand, experiences little seasonality. One exception is that certain libraries spend their entire budgets before the end of the fiscal year, in which case they prepay for books that will be selected at a later date.
The typical customer ranges from colleges, universities, and bookstores to hospital system libraries and resellers like Amazon.
One of the partners works as CEO and oversees and manages operations. He focuses primarily on the financial side of the business, strategic alternatives, and cash allocation.
35 employees work for the company, with 2 key employees reporting to the CEO and handling day-to-day operations. Digital development is outsourced.
Included in the above numbers is a team of customer support specialists who take inquiries and place orders for customers. The company has a strong Salesforce.com backbone to its sales and customer service, which allows for efficient and timely sales and customer support efforts.
A new owner will be able to capitalize on the digital aspect of the business. The most considerable scale opportunity may be presented by introducing new digital services. The new platform currently being developed can serve an infinite number of verticals. For instance, it can distribute a VR program that a cancer hospital utilizes with elderly patients undergoing an MRI, generating new revenue for both the hospital and the company.
The company has a substantial upside potential for distributing digital assets from hospital and university systems and expanding the digital library market.
Prospects for digital expansion in telemedicine, clinical, pharmaceutical, hospital, direct-to-practitioner, and specialized niche content offerings to support dementia caregivers, early cancer screening, and many other areas are alluring.
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