Free Healthcare Business Valuation Calculator (Plus, Valuation Insights from a Healthcare M&A Advisor)

Getting an accurate valuation is the first step to understanding whether now is the right time to sell your healthcare business. A valuation can tell you what kind of exit you can realistically achieve. But if your valuation is off, you risk either not finding buyers (because it’s too high) or leaving money and leverage on the table (if it’s too low).

In this guide, we’ll show you two ways to value your healthcare business:

1. Use our free business valuation calculator to get a quick ballpark estimate. Our business valuation calculator uses an industry-specific DCF methodology to help give you an accurate picture of your company’s value.
2. Work with an experienced healthcare M&A advisor to get the accurate, market-ready valuation you need to make informed decisions about your exit. This is the route you want to take if you’re serious about selling your company. A healthcare M&A advisor with experience in selling companies like yours will have the relevant data and industry knowledge to value your business accurately. They can also provide strategic guidance on how to maximize value and can negotiate on your behalf to improve exit outcomes.

At Axial, we have over 3,000 M&A Advisors in our network. By learning about your business and exit goals, we can make a data-informed decision on which M&A advisors are suited to value your healthcare company and take it to market. We have helped several types of healthcare businesses find advisors, including home healthcare services, medical staffing companies, dental practices, and healthcare IT platforms. Schedule your free exit consultation today.

Note: We wrote this article with insights from Ryan Mingus, a healthcare M&A advisor within our network, and the Managing Director of Mergers and Acquisitions at TUSK Practice Sales. The TUSK team has over 100 years of combined experience in medical practice M&A, with expertise in dental practices, dermatology clinics, plastic surgery practices, and more.

Axial’s Free Healthcare Business Valuation Calculator

Our free business valuation calculator is designed specifically for small business owners who want a quick estimate of their company’s worth. Our valuation calculator uses an industry-specific discounted cash flow (DCF) methodology that M&A advisors trust when conducting preliminary valuations.

On our calculator, you can choose from these healthcare industries:

• Healthcare products
• Healthcare support services
• Healthcare information and technology

To use the calculator, you’ll simply input key metrics, including:

• Annual revenue (last 12 months)
• EBITDA (last 12 months)
• Growth rate

Once that’s done, you’ll receive a valuation range that provides a realistic starting point for understanding your company’s potential worth.

Are Healthcare Business Valuation Calculators Accurate?

While our calculator provides a useful estimate, it’s important to recognize what it cannot capture.

Calculator-based valuations rely on standardized assumptions and industry averages, but they miss the nuances of key factors that significantly impact a healthcare business’s value.

These factors may include:

• The quality of your payer mix and reimbursement structure. A practice with 70% commercial insurance and 30% Medicare/Medicaid will have a different multiple than one with the reverse ratio. Calculators can’t assess the stability and predictability of your revenue streams based on these payer relationships.

• Regulatory compliance and licensing status. Healthcare businesses operate under strict regulations that vary by state and specialty. Your compliance record, licensing status, and any outstanding regulatory issues significantly impact value.

• Staff retention and operational dependencies. Do you have long-tenured clinical staff? Can your business operate smoothly without your daily involvement? If you own a medical practice, does your practice have more than one provider? These operational realities dramatically affect valuation multiples, especially for medical practices where patient relationships and clinical expertise are tied to specific individuals.

• Real transaction data from recent deals in your healthcare sub-sector. Perhaps most importantly, calculator valuations don’t reflect what buyers have actually paid for businesses like yours in recent months. Market conditions change, buyer demand fluctuates, and what worked as a valuation benchmark in the past may not apply today. At the end of the day, your healthcare company’s value is what a buyer is willing to pay for it.

As Ryan Mingus, the owner of TUSK Practice Sales, emphasized in our interview, “Calculator-based valuations can give you a general sense of value, but they can’t account for the dozens of factors that influence what a buyer will actually pay for your practice. You also want to be able to speak to your valuation range during negotiations with sophisticated buyers, like PE firms who have experience in valuing and acquiring healthcare businesses.”

So in short, you can use Axial’s free healthcare business valuation calculator to get a cursory idea of your company’s multiple. But if you’re serious about selling, then you want to get a valuation done by a healthcare M&A advisor.

How Healthcare M&A Advisors Value Businesses

Typically, M&A advisors with healthcare experience will use several valuation methods to arrive at your valuation range, including discounted cash flow analysis, precedent transaction analysis, and comparable company analysis.

These analyses aim to understand how a buyer will value your business, including how they will assess your current value and potential growth.

• Discounted cash flow analysis projects your business’s future cash flows over 5–10 years and discounts them back to present value, accounting for healthcare-specific factors like reimbursement rate changes, regulatory impacts, and patient retention patterns. This method is particularly useful for healthcare businesses with predictable, recurring revenue streams.

• Precedent transaction analysis examines the actual purchase prices paid for similar healthcare businesses that have recently sold, providing real-world benchmarks. However, transaction details for small healthcare businesses are often private, which is why working with an advisor with access to this data is so valuable.

• Comparable company analysis benchmarks your business against similar healthcare companies, considering factors like size, geography, payer mix, service offerings, and growth rate. This is often the most critical method for healthcare businesses because it reflects what buyers are currently willing to pay in your specific sub-sector.

In our interview with Ryan Mingus, the comparable company analysis stood out as the most critical for his firm. “We use a comparable company’s analysis because we have extensive data on what healthcare companies have actually sold for. We know what buyers in an owner’s specific sub-sector are paying, what multiples they’re offering, and how they’re structuring deals. That real-world data is what makes a valuation accurate and defensible.”

That’s why recent and relevant experience is key. This allows M&A advisors to understand the healthcare-specific factors that drive your value, including regulatory environments, reimbursement trends, and staffing dynamics. Critically, what an M&A advisor also understands is what buyers are looking for.

An experienced advisor can also identify value drivers that generic calculators miss, such as your recall system effectiveness for dental practices, your referral network strength for specialty practices, or your contract renewal rates for home healthcare agencies.

For example:

• For home healthcare agencies, buyers may highly value contract renewal rates and caregiver retention metrics that demonstrate stable, recurring revenue.

• Meanwhile, with dental practices, buyers may look for a robust and effective recall system to keep patients coming back for regular hygiene appointments.

• Buyers acquiring healthcare IT companies may prioritize customer retention rates, integration capabilities with existing EHR systems, and the stickiness of the platform — how difficult and costly it would be for customers to switch to a competitor.

Within Axial’s network alone, we’ve seen healthcare businesses ranging from medical staffing companies with $8M in revenue to specialty medical practices generating $50–$75M annually, each requiring different valuation approaches based on their business model and market position.

You can learn more about valuing a business in general with these Axial resources:

• How to Value a Company for Sale
• How to Maximize Your Business Value Before You Sell

How Working with a Healthcare M&A Advisor Can Improve Your Exit Outcomes

In addition to valuing your company accurately, healthcare M&A advisors help you achieve your ideal exit by taking your business to market.

Your ideal exit is not just about your final sale price, but also the deal structure (including how much of your sale price is tied up in rollover equity), the exit timeline (which involves how long and in what capacity you’ll stay on post-transaction), and stewardship of your business.

Healthcare M&A advisors can help you get the exit you want by:

• Creating a competitive bidding process
• Negotiating on your behalf
• Being an objective and experienced advocate for your business

Creating a Competitive Bidding Environment

One of the most impactful ways an M&A advisor can improve your exit outcomes is by creating competitive tension among multiple qualified buyers.

Typically, what happens is a healthcare business owner will get approached with an unsolicited offer. But this doesn’t give the owner any idea of whether the offer is competitive. Even if the offer you get seems fair (i.e., matches the figure and deal agreement you had in mind), you won’t know if it’s truly fair until you’ve properly marketed your business to a broad pool of qualified buyers.

But most owners don’t have the time, the buyer network, or the market knowledge to identify which buyers are most likely to value your specific practice. This is where advisors with deep healthcare networks make all the difference.

Let’s look at how this works at TUSK Practice Sales.

Ryan Mingus and his team typically market healthcare practices to their extensive network of vetted buyers.

Out of the buyers they contact, a significant percentage will sign NDAs, indicating initial interest. From there, multiple buyers typically submit Indications of Interest (IOIs). The team then narrows the field to the most qualified buyers who are the best strategic fit.

This process transforms the seller’s position from negotiating with one buyer to choosing among multiple qualified options — significantly increasing both leverage and final sale price. In fact, TUSK’s proprietary data shows they can increase unsolicited offers by up to 35% through competitive bidding processes.

They Navigate Complex Deal Structures and Earnouts

Healthcare transactions often involve complex deal structures, and earnouts have become increasingly common as market dynamics have shifted.

According to Ryan Mingus, “We’re seeing some form of earnout in almost every deal. Market dynamics dictate how often you see earnouts and how much of the total deal is tied up in an earnout. We are in a higher interest rate environment than previous years and it’s resulting in earnouts being seen more frequently and as a greater percentage of the cash at close.”

But not all earnouts are created equal. As Mr. Mingus explains, “We at TUSK define an earnout as dollars at risk based on ‘maintaining the business based on time of sale.’ This differs from future dollars that require ‘the business to grow.’ There is an important distinction there that buyers aren’t always upfront about.”

An experienced advisor helps you evaluate earnout terms objectively, understanding:

• How much of the deal should be in an earnout? Mr. Mingus notes, “As a general rule we don’t want to see any more than 20% of a deal in an earnout. That being said if there is zero equity roll then you could see a higher percentage than that. It all depends on the risk threshold of the seller and the other options that are on the table.”

• How are earnouts calculated and validated? What level of auditing rights do you have? How is the earnout being calculated? Can you verify the numbers?

• How much control do you maintain? Will you have the authority to make decisions that impact your ability to hit earnout targets, or will the buyer’s operational changes make it impossible to achieve?

Mingus emphasizes the importance of expertise here: “The devil is in the details. How much of the deal is in an earnout, what are the terms of the earnout, how is the earnout being calculated, what level of auditing/validating does the seller have when determining the final calculation(s), how in control is the seller in helping achieve the earnout… Without having an experienced advisor at the table it’s impossible to maximize the deal terms of an earnout.”

An advisor can also negotiate protective provisions, like non-interference clauses that prevent buyers from undermining your ability to hit earnout targets by changing reimbursement processes, staffing models, or patient care protocols.

They Provide Professional Negotiation Expertise

Healthcare business sales are inherently emotional. You’ve likely spent years — maybe decades — building your practice, developing relationships with patients and staff, and establishing your reputation in the community. This emotional attachment can make it difficult to negotiate objectively.

M&A advisors bring the professional detachment necessary to evaluate offers clearly.

Ryan Mingus told us that, “By the end of a marketed process, a client is weighing 5 very meaningful deal terms that are both economic (sale price, earnouts, equity roll) and lifestyle-related (transition timeline, post-sale involvement, stewardship of your practice).”

An experienced advisor helps you prioritize these competing factors based on your specific exit goals. For a physician approaching retirement who wants to fund their retirement, maximizing cash at close might be the most important factor. For a medical provider who wants to continue practicing while stepping back from ownership, the cultural fit with the buyer and the transition timeline might matter more than maximizing the highest number.

How Axial Connects Healthcare Owners with the Right Advisors

At Axial, we’ve developed a data-driven approach to matching healthcare business owners with M&A advisors who have relevant experience and proven track records in the healthcare industry.

Our Network and Evaluation Process

With over 3,000 M&A advisors and investment banks in our network, we don’t provide generic referrals. Instead, we analyze each advisor’s transaction history to understand their specific healthcare expertise.

We evaluate advisors based on three critical factors:

1. Recent, relevant healthcare deal experience. We prioritize advisors who have successfully sold healthcare businesses similar to yours — whether that’s dental practices, medical staffing companies, home health agencies, specialty medical practices, or healthcare technology businesses. We analyze the total number of relevant deals they’ve managed within Axial’s network, with particular emphasis on transactions from the last 24 months to ensure current market knowledge.
2. Down-funnel success. We track each advisor’s ability to convert buyer interest into actual offers. This includes metrics like the number of qualified bids generated per transaction, the percentage of deals that reach the Letter of Intent (LOI) stage, and their success rate in actually closing transactions once under contract. This data tells us which advisors deliver results, not just marketing promises.
3. Professionalism and reputation. Our relationship management team works one-on-one with the M&A advisors in our network. They have a clear view into an M&A advisor’s professionalism and responsiveness.

The Curated Shortlist Process

We start by pairing you with an Exit Consultant who takes time to understand your healthcare business and your specific exit goals. Are you looking to retire completely, or do you want to stay on in a reduced role? Is maximizing sale price your top priority, or is finding a buyer who will maintain your practice culture more important? What’s your ideal timeline? What do you envision for your healthcare business in the future?

Your Exit Consultant will leverage Axial’s network to create a shortlist of 3–5 candidates specifically qualified to handle your healthcare business sale. Each advisor on your shortlist will have:

• Demonstrated expertise in healthcare transactions within your sub-sector
• Proven ability to generate competitive buyer interest and secure multiple bids
• Strong professional reputation within our network
• Recent deal experience that shows they understand current market conditions

We provide detailed insights about each candidate to help you evaluate your options and prepare for advisor interviews, so you can choose the best M&A advisor for your company.

We have successfully connected M&A advisors with healthcare business owners across numerous sub-sectors — from primary care practices and dental offices to medical staffing companies, home health agencies, healthcare IT platforms, and specialty practices in areas like dermatology, ophthalmology, and physical therapy.

Schedule your free exit consultation to get started.

FAQs

How Do You Value a Healthcare Business?

Healthcare businesses are typically valued using three complementary valuation methods:

• Discounted Cash Flow (DCF) Analysis, which estimates value based on projected future cash flows, accounting for healthcare-specific factors like reimbursement rate changes, regulatory impacts, and patient retention patterns.

• Comparable Company Analysis that benchmarks your business against similar healthcare companies, considering factors like size, geography, payer mix, service offerings, and growth rate. The challenge is finding truly comparable companies, which is where an advisor’s industry experience becomes invaluable.

• Precedent Transaction Analysis, which examines the actual purchase prices of similar healthcare businesses that have recently sold. Transaction details for small healthcare businesses are often private, so working with an M&A advisor who has that data will significantly help you arrive at an accurate valuation.

M&A advisors typically use all three methods to triangulate an accurate valuation range. They also factor in healthcare-specific considerations like your compliance record, licensing status, staff retention, referral networks, and payer relationships.

You can learn more about valuing a business with these Axial resources:

• How to Value a Company for Sale
• How to Maximize Your Business Value Before You Sell

What Are Average EBITDA Multiples for Healthcare Companies?

Healthcare company valuations vary significantly based on business type, size, and specific characteristics. While we don’t have universal multiples that apply across all healthcare businesses, valuation multiples generally increase with:

• Business size (larger businesses typically command higher multiples)
• Recurring revenue (service contracts and predictable patient volumes)
• Payer mix (higher commercial insurance percentages vs. Medicare/Medicaid)
• Growth rate (consistent year-over-year growth in revenue and profitability)
• Operational efficiency (businesses that can operate without heavy owner involvement)

For home health agencies, factors like recall rates, patient retention, and caregiver stability significantly impact multiples. For dental practices, equipment condition, multi-provider operations, and strong hygiene programs drive higher valuations. For medical staffing companies, contract lengths, client concentration, and placement rates are key drivers.

To highlight the different valuation multiples that can be assigned to a healthcare business, let’s look at average EBITDA multiples for dental practices, as reported by Ryan Mingus of TUSK Practice Sales.

• Under $1 million EBITDA: The estimated multiple is 5 to 7 times.
• Over $1 million EBITDA: The estimated multiple increases to 6 to 8 times.
• Over $3 million EBITDA: The estimated multiple ranges from 7 to 10 times.

“But where exactly your practice falls within those ranges depends on your revenue growth, patient base, payer mix, location, facility condition, revenue trends, churn rate, and much more,” Mr. Mingus explains.

We can also look at data from within the Axial network on healthcare EBITDA multiples. In part because healthcare is such a diverse industry, we saw a significant range of EBITDA multiples, from 2.4x to 9.7x.

The most accurate way to understand the valuation multiple for your specific healthcare business is to work with an M&A advisor who has recent transaction data from your sub-sector.

What Factors Drive Healthcare Business Valuations Higher or Lower?

Several factors can significantly increase or decrease your healthcare business’s value.

Factors that drive valuations higher:

• Strong payer mix with high commercial insurance percentages
• Low patient/client concentration (diversified customer base)
• Recurring revenue through service contracts or maintenance agreements
• Modern, well-maintained equipment and facilities
• Multiple providers (reduces key person risk)
• Strong operational systems that function without heavy owner involvement
• Growing market with increasing demand
• Clean regulatory and compliance record
• Long-tenured, skilled clinical staff with low turnover

Factors that drive valuations lower:

• Heavy reliance on Medicare/Medicaid reimbursements
• High patient concentration (a few patients representing large revenue percentages)
• Outdated equipment or facilities requiring significant capital investment
• Single-provider practices with heavy owner dependency
• Declining or stagnant revenue
• High staff turnover or difficulty recruiting qualified clinicians
• Regulatory issues or compliance concerns
• Pending reimbursement rate changes or regulatory shifts

Understanding which factors impact your specific business helps you make strategic improvements before going to market. An experienced healthcare M&A advisor can identify your biggest value drivers and help you optimize them before marketing your business to buyers.

How Much Do M&A Advisors Charge?

M&A advisor fees typically consist of two components: a retainer fee and a success fee.

Retainer fees vary significantly, with some advisors charging fixed upfront fees while others use monthly retainers or milestone-based structures. About 24% of advisors work without any retainer, earning compensation only when the deal closes.

Success fees are commonly structured in two ways:

• Flat percentage fees: The advisor charges a fixed percentage of the sale price regardless of deal size. Typically, the higher your estimated sale price, the lower the percentage they’ll quote. For example, an advisor might charge 5% for a $2M deal but negotiate down to 3% for a $10M deal.

• Tiered structures: The fee percentage scales based on deal size, with several variations. One example of this is the Lehman Formula, where advisors charge 5% on the first $1M, 4% on the second $1M, 3% on the third, 2% on the fourth, and 1% above $4M. Other tiered structures include accelerator formulas (where fees increase with larger deals) or declining percentage structures that reward larger transactions.

While these fees may seem substantial, data consistently shows that businesses represented by advisors sell for 6–25% more than those sold by owners directly. Healthcare business owners also save 30+ hours per week during the process and have significantly higher success rates of actually completing a sale.

For more detailed information on advisor fees and whether they’re worth the investment, read our comprehensive guide:

• How Much Do Brokers Charge to Sell a Business, and Are They Worth It?
• The M&A Fee Guide (2024–2025)