ELLIE MENTAL HEALTH

Item 7 outlines initial investment from $392,275 to $679,575, covering buildout, equipment, and three months' operating reserves for these outpatient therapy clinics. Ongoing fees hit hard at 7.5% royalty on gross revenues, plus a 7.5% shared services fee, clinician-specific charges up to $1,000-$3,000 monthly caps, $100 per provider marketing, tech fees ($150-$400/month per clinician/prescriber), and quarterly LMS costs—potentially 15%+ of sales total. Item 19 reveals average gross revenue of $665,811 across disclosing units, a solid figure for a system averaging under three years old, implying scalability in high-demand mental health but no profit breakdowns, so operators must factor 50-60% costs for therapists and overhead.

System metrics in Item 20 show resilience: 255 locations up 6% from 240 in 2024, just 3 terminations, 6 transfers, and 85 projected new units signaling aggressive expansion. SBA data shines with 121 loans averaging $181,003 and a tiny 0.8% default rate, far below industry norms, indicating viable financing and low distress. However, litigation in Item 3 details franchisee suits over misrepresented EHR, billing, and credentialing support, plus noncompete battles—red flags for operational execution risks despite revenue allure, demanding scrutiny of vendor reliability before investing.