In this informal YouTube commentary, the speaker evaluates a mouse genotyping and microbiome‑sequencing service listed on Axial. The business reported $4.7 million in 2021 revenue with a 55 % EBITDA margin and 23 % year‑over‑year growth. The presenter highlights the attractive high‑margin, diversified B2B customer base, and steady growth in the drug‑discovery ecosystem, while questioning why the company hasn’t been acquired despite many competitors. He raises due‑diligence concerns about EBITDA versus cash profit, equipment depreciation, vague geographic coverage, and potential regulatory or technological disruption (e.g., FDA Modernization Act 2.0). The speaker admits limited knowledge of genetics and drug discovery, noting both the opportunity for a non‑expert buyer and the need for deep industry learning. He concludes the deal looks promising, gives it a high rating, and invites viewer comments.
Chapters
The only better business than this is probably being Taylor Swift. You're running at 55% profit margin. In 2021, they did $4.7 million in revenue and something to like is they're growing. They grew 23% to the next year. Why hasn't this been purchased? Like, what's going on? Because there's tons of competitors out there and if they're all making 55% EBITDA margin, like, you're darn sure, like, they would be willing and interested in buying a business like this. All right, let's break down this mice genotyping company. Let me take off my headphones and tell you what this it does. So these guys run basically a laboratory service, right? If you are doing drug discovery or any of that kind of stuff and you're doing tests on mice, you will need to get those mice genotyped, do sequencing of their microbiome— so that's the stuff in the gut— and do all this type of ID that happens if somebody's using mice for their testing, right, in terms of drug discovery, all that kind of stuff. Like, that's what this company does. This was a new thing to me. I didn't know this existed. And this is a listing I saw on listing site Axial, which is pretty cool. And basically their numbers are really good, right? They run as a pretty good small business, $4.7 million in revenue in 2021. And that EBITDA number, so earnings before interest, tax, depreciation, amortization, was a big chunk, nearly 50%, $2.6 million, or above 50%, so 55%. And the business appears to be just blowing and growing, just like moving forward as this cool little like laboratory service located here in the United States. So, uh, cuz this is a new space for me, like I read about what this stuff was and I went and Googled all these words and I think I understood most of them. So yeah, that may show you about the type of buyer I would be for something like this. I have no healthcare background, but this just smelled like a business that could be a pretty good business. And looking at this like EBITDA margin, which is really, really high, like the only better business than this is probably being Taylor Swift. You're running at 55% profit margins on this type of stuff. Now look, a thing to worry about here is EBITDA, earnings before interest, taxes, depreciation, amortization. That is not cash profit, right? That means maybe you have a lot of equipment, you borrowed money to have that equipment. That's interest payments. Maybe there's depreciation, meaning you're having to pay to update that equipment all the time and get the latest and greatest stuff. Again, that's where I would want to dig into this deal and understand, okay, well, you said it's 55% EBITDA margin. Like, what's my real profit margin? How much money am I going to make on this deal? So one thing I did find is I went and Googled like mice genotyping in the United States, and it's a bigger, like, widespread business than I thought. So mouse genotyping services. It turns out there's a lot more than I thought. People are doing this. So I'd be really curious, like, when I talk to the seller, like, why is this amongst all these mice genotyping services? Like, why are you guys special and what differentiates you in the market? And this teaser does not really talk about that. Um, so that's the first place I would start for sure. But look, in 2021 they did $4.7 million in revenue, and something to like is they're growing. They grew 23% to the next year at 55% gross margin, or 50% EBITDA margin, and they're planning on growing again in the next year. And growing is good because growing means the business is likely to keep growing. Look, it's confusing. I don't know anything about it. There's a lot of people like me who don't know anything about mice genotyping, so it's going to scare away a lot of buyers. Now, the other side of that is there's a lot of people who know a lot about mice genotyping, and they're probably going to have an advantage on me as a potential buyer. So I like that it scares people away, but it also kind of scares me away because I'm one of those people, because I don't know anything about drug discovery and mice genotyping. So that's something to really think about. Look, I love also that business keeps growing. Like, it's super steady. They grew 20% year over year. Like, drug discovery is not going anywhere. Though I did publish this deal in my newsletter where I talk about deals for sale that are interesting, and somebody said, hey, just so you know, the FDA Modernization Act of 2.0, which was recently passed, does allow basically computer simulations of things like genotyping and stuff like that for mice and other drug discovery stuff. So there is a future in which potentially this business, the technology, could get well, make it not really a business anymore. But look, if a business has likely been around like this one is for a long time and the growth is super steady, there's a pretty good chance it's going to keep growing. So that's a good sign as well. Look, they've talked about having a diversified customer base. I like the fact that they're not dependent solely on one customer or even a couple customers. That can be a real problem when you buy a business like this, especially when it's B2B and recurring kind of services. That's an issue. And look, drug discovery is a consistent thing, so you have to like that you're there, you're providing this service all the time, you're a relatively small service for a lot of these companies that are potentially your customer, and And that just gives you a good sign that they're going to stick with you for a long time and not try to like automate you out. Right there, $5 million in drug discovery. You're, as my grandpappy used to say, you're no bigger than a bump on a pickle. Like nobody, nobody's going to try to automate you out and they're just going to ship you these mice assays to do your thing and send them back the results. Look, they're also very vague in geography and it just says the United States. So to me, when a listing like this just says the United States, it makes me wonder like, huh, why are they being so vague? Uh, there may be a situation here where somebody, because they're the only one of these mice genotyping things in a particular area, like they may just own the whole market and that's why they're running at 55% EBITDA margins. Uh, again, just something to dig into to understand. All right, so let's talk about things I don't like about this deal. Uh, I don't know crap about gene testing. I don't know crap about drug discovery. So anything, when I would go look at a deal like this, I would really have to understand how this industry works. And that means probably a month or two of going to talk to every smart person I know to learn how it works so I could become, well, just an expert in it. And look, another thing, and maybe this will suss out as I go talk to experts and network to try to talk to people in this industry, is like, I don't know where this industry is going. I mean, the people in my newsletter say it's got a bright future and they would pursue it if they weren't already busy. They like the deal as well. But like, I don't know what the future is here. It's because I'm not a drug discovery guy. Like, just pretty straightforward. But I don't know, there's something that just smells interesting about it. And look, another red flag for me is like, why hasn't anybody else bought this already? Like, why hasn't this been purchased? Like, what's going on? Because there's tons of competitors out there, and if they're all making 55% EBITDA margin, like, you're darn sure, like, they would be willing and interested in buying a business like this. So anyway, stuff I'd want to know when I go talk to the seller, for sure, like, why are they selling? Like, this seems like a really great business. What's the motivation here? Why are you trying to get out of it? And then two, I'd really want to understand what the profit is. So look, I have no idea what I'm doing on this business, but it smells good to me. And for that reason, I would give it 5 stars, chilies, whatever it's going to be. But a good one to look into. We'll put the link in the listing below. And love this one from Axial. And that's what I know about one of the coolest businesses I've seen in a while, a mouse genotyping lab and sequencing thing, which just sounds like a ton of fun except for the fact they're killing mice, which doesn't sound like that awesome. But anyway, making money's also fun. All right, that's what I know about this one. Let me know what you think in the comments below. Bye.
