NICU Break-Even Analysis: $249K Monthly Revenue Floor

Fixed costs $144.0K Monthly overhead

Contribution margin 86% After variable costs

Break-even revenue $167.4K Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

This calculator tests whether monthly NICU revenue covers direct costs and the fixed cost base.

Lean Base Full

Monthly revenue Revenue sets the margin available to cover fixed monthly costs. $ Low census High census Variable expenses Direct costs like billing fees and system usage rise with revenue. $ Lower fees Higher fees

Money available to cover fixed costs $603,175 $638,280 revenue - $35,105 variable expenses

Margin ratio

95%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base contribution margin must cover. $ Lean setup Full staffing

Break-even chart Revenue Total costs

Which expenses are fixed and which move with patient volume?

Cost classification

Break-even is only reliable if fixed overhead stays separate from patient-driven spend. Here’s the quick math rule: fixed items set the monthly hurdle, while variable items reduce contribution margin.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Include $75,000 per month in fixed overhead from Month 1 through Month 60.	Treating lease as patient-driven because census changes.
Medical Malpractice Insurance	Fixed	Include $25,000 per month in fixed overhead before calculating required contribution margin.	Leaving insurance outside break-even because it is not clinical labor.
Utilities	Semi-variable	Start with the $12,000 monthly base, then review usage pressure as patient census rises.	Modeling utilities as fully fixed during higher occupancy.
Medical Director	Semi-fixed	Use the $350,000 annual salary as a capacity step, not a per-treatment expense.	Treating clinical leadership as fully variable with each treatment.
Medical Supplies & Pharmaceuticals	Variable	Apply 4.0% of revenue in the first year, stepping down to 3.2% by the fifth year.	Burying supplies in overhead and overstating contribution margin.
Laboratory & Diagnostic Services	Variable	Apply 3.5% of revenue in the first year, stepping down to 2.3% by the fifth year.	Ignoring test volume when patient acuity and treatment volume rise.
Billing & Collections Fees	Variable	Apply 4.0% of revenue in the first year, stepping down to 3.2% by the fifth year.	Burying billing fees in overhead instead of contribution margin.
EHR System Usage Fees	Variable	Apply 2.5% of revenue in the first year, stepping down to 1.3% by the fifth year.	Excluding usage fees from contribution margin while keeping only the base license.

How does break-even shift from a lean ramp to base and full capacity?

Scenario table

Lean ramp has the tightest cushion because fixed overhead is already about $214K a month. As staffing and service volume rise, revenue grows faster than variable cost, so break-even stays near $249K-$255K and risk drops.

Planning cases only; actual volume, payer mix, and staffing can move the outcome.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Year 1 lean ramp	$3.09M	$433K	$214K	86.0%	$2.45M	Clear cushion above break-even, but overhead is heavy.
Year 3 base case	$7.02M	$843K	$224K	88.0%	$5.95M	Break-even stays near $255K, so the cushion is wide.
Year 5 full-capacity case	$11.97M	$1.20M	$224K	90.0%	$10.55M	Strongest cushion here, with break-even far below revenue.

What could break the NICU break-even plan?

Stress test

The plan has a wide cushion, but the break point is lower census, slower payer cash, and wage or supply inflation. Break-even is about $249k a month, versus about $2.17M in modeled Year 1 revenue, so the cushion is real but not immune.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$249k	$1.92M cushion	Healthy cushion; the model still clears fixed cost easily.
Revenue shortfall	Monthly revenue falls 10% from the model run rate.	$249k	$1.70M cushion	Lower census cuts room fast, but the unit stays above break-even.
Fixed-cost pressure	Monthly fixed overhead rises 10% on staffing and overhead.	$273k	$1.89M cushion	Extra fixed cost lifts the bar, yet the current revenue base still covers it.
Margin pressure	Variable expense rate rises from 14% to 18% of revenue.	$261k	$1.90M cushion	Reimbursement or supply pressure trims margin, but break-even stays far below run rate.
Combined pressure	Revenue falls 10%, fixed overhead rises 10%, and variable costs rise to 18%.	$287k	$1.66M cushion	Multiple hits shrink the cushion, so delayed collections or wage inflation matter most here.

Is the NICU ready to open before the first lease and equipment commitment?

Founder checklist

This NICU is only ready if referral flow, staffing, and billing can support the opening load from day one. The model shows Month 1 break-even and a $288K minimum cash need, but that still depends on getting the unit live without delays.

1Referral Volume$555K/mo

Verify the referral pipeline can support the Year 1 treatment mix, because launch demand has to fill the unit before break-even is believable.

2Staffing Roster19 staff

Verify day-one coverage for 2 neonatologists, 10 NICU nurses, 4 respiratory therapists, 2 developmental specialists, and 1 lactation consultant, because missing roles cap capacity fast.

3Fixed Overhead$214K/mo

Verify the fixed load can hold near $144K a month in facility and operating contracts plus about $70K a month in wages, because that cost base must clear before the margin helps.

4Contribution Margin86% CM

Verify payer contracting and billing workflows keep COGS and variable fees near the model, since about 14% of revenue leaves roughly 86% to cover fixed costs.

5Opening Package$4.65M capex

Verify the opening build is funded and installed on time, including incubators, ventilators, monitoring, infusion equipment, imaging, EHR, build-out, infection control, and backup power.

6Cash Buffer$288K min

Verify opening cash stays at or above the Month 1 minimum, because payback and breakeven only work if the ramp does not slip.