Medical Oxygen Plant Break-Even Analysis: $126K Monthly Threshold

Fixed costs $50.9K/mo Base overhead

Contribution margin 92.5% After variable costs

Break-even revenue $55.0K/mo Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against break-even for a medical oxygen plant.

Lean Base Full

Monthly revenue Revenue is the top line that funds direct costs and overhead. $ Low sales High sales Variable expenses These rise with output and delivery volume, so they move with revenue. $ Low costs High costs

Money available to cover fixed costs $1,051,807 $1,127,346 revenue - $75,539 variable expenses

Margin ratio

93%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that contribution margin has to cover. $ Lean base Heavy base

Break-even chart Revenue Total costs

Which medical oxygen plant expenses are fixed, and which move with sales?

Cost classification

Break-even revenue is only useful if fixed overhead stays separate from volume-driven items. In this model, power, transport, direct labor, and maintenance must move with production, or break-even can look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Plant Facility Lease	Fixed	Include $28,000 per month in baseline overhead from Month 1 through Month 60.	Treating the plant lease as tied to oxygen volume.
Administrative Office Rent	Fixed	Include $3,500 per month as recurring overhead, separate from production throughput.	Leaving office rent out because it is not a plant floor expense.
General Business Insurance	Fixed	Include $2,800 per month before calculating contribution needed to break even.	Modeling insurance as a sales percentage without support from the assumptions.
Senior plant operators, hazmat drivers, and quality technicians	Semi-fixed	Add labor in staffing steps as full-time equivalent headcount rises with scale.	Treating direct labor as fully fixed even when staffing expands with volume.
Electricity per 1000 CCF	Variable	Apply $9.50 per 1000 CCF produced so power rises with oxygen output.	Parking electricity in fixed overhead and overstating contribution margin.
Truck Fuel per 1000 CCF	Variable	Apply $2.50 per 1000 CCF for bulk delivery activity tied to shipped volume.	Treating transport fuel as fixed when deliveries grow with sales.
Equipment Maintenance per 1000 CCF	Variable	Apply $1.50 per 1000 CCF so maintenance tracks plant usage.	Assuming maintenance stays flat while production hours rise.
Regulatory Audit Fees	Semi-variable	Apply 0.5% of revenue in the model, tied to operating activity and compliance load.	Ignoring audit fees because they are small as a revenue percentage.

How does break-even shift from a lean launch year to base and full utilization at a medical oxygen plant?

Scenario table

Break-even gets easier as volume rises because plant overhead and payroll stay mostly fixed while revenue grows faster than variable costs. The lean launch case still has a cushion, but capital spending (capex) can keep cash tight early on.

Planning cases only; they show utilization sensitivity, not guaranteed results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case (Year 1)	$483k	$92k	$102k	80.9%	$288k	Strong cushion, but cash stays tight early.
Base contracted case (Year 3)	$1.13m	$167k	$125k	85.1%	$835k	Comfortable coverage; break-even risk is low.
Full scaled case (Year 5)	$1.70m	$230k	$148k	86.4%	$1.32m	Wide cushion helps absorb volume swings.

What can push this medical oxygen plant below break-even?

Stress test

Year 1 starts at about $482.6k of monthly revenue against $126.5k break-even, so the cushion is wide. This is a launch-risk test, not lender underwriting; the real pressure is softer bulk volume, higher power, and delivery miles.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$126.5k/month	$356.1k cushion	Strong launch cushion.
Revenue shortfall	Monthly revenue falls 15% on softer bulk orders.	$126.5k/month	$283.7k cushion	Bulk softness trims the safety net fast.
Fixed-cost increase	Add one extra $280k plant lease.	$161.1k/month	$321.5k cushion	Lease creep lifts the break-even floor.
Margin pressure	Variable costs rise 5 points from higher power and delivery miles.	$134.8k/month	$347.8k cushion	Power and dispatch overruns move break-even up.
Combined pressure	Monthly revenue falls 15%, one extra $280k lease is added, and margin drops 5 points.	$171.8k/month	$238.4k cushion	The cushion shrinks, but break-even still holds.

What should the founder verify before locking the plant build for this medical oxygen business?

Founder checklist

The model shows $5.79M Year 1 revenue and $3.344M EBITDA, but it still hits a -$5.293M cash low in Month 8. So the gate is simple: prove demand, site load, and cash timing before you lock the $8.33M capex.

1Demand Proof$5.79M

Verify signed demand supports the Year 1 mix of 40,000 bulk liquid, 1,200 large cylinders, 4,500 standard cylinders, 5,500 rental cylinders, and 90 rush deliveries before you buy the $350K cylinder stock.

2Fixed Load$102.3K/mo

Verify the monthly base load is really about $102.3K, made up of $40.5K in overhead and about $61.8K in Year 1 payroll, because that is the cash floor before growth spend.

3Margin Spread57.8% EBITDA

Check that the first-year mix still holds the model’s 57.8% EBITDA margin after production, delivery, marketing, and payroll, because that spread is what funds the fixed load.

4Power Load$5.7M core

Verify site power and storage capacity before you lock the $5.7M core build of the air separation plant and cryogenic tanks, because a weak site will strand the biggest spend.

5Launch Flow$950K setup

Validate hospital routes and quality testing flow before you commit the $750K fleet and $200K lab setup, because rush deliveries and medical-grade checks both have to work on day one.

6Cash Buffer-$5.293M

Protect the Month 8 cash low of negative $5.293M, and do not add staff above the Year 1 plan unless volume is contracted, because the build and working capital will drain cash before collections catch up.