Medical Practice Valuation Calculator
Find out what your medical practice is worth. Get a professional valuation based on revenue, profit margins, and industry standards.
How the Medical Practice Valuation Calculator works
Enter your annual revenue, profit margin, and practice type. Get instant valuation using methods buyers and sellers actually use.
Know your practice’s worth before selling, buying, or bringing in partners. Price it right and negotiate confidently.
How it works
Tutorial
Medical practices typically sell for 0.5 to 1.5 times annual revenue, or 3 to 7 times annual profit (EBITDA). The exact multiple depends on your specialty, patient base, location, and growth trend.
Use the calculator above for instant results, or follow this guide to calculate manually.
The Formula
| Method | Formula | When to Use |
|---|---|---|
| Revenue Multiple | Annual Revenue × 0.5 to 1.5 | Quick estimate, general practice |
| EBITDA Multiple | Annual EBITDA × 3 to 7 | More accurate, profitable practices |
| Asset-Based | Equipment + Inventory + Goodwill | Struggling practices |
Step-by-Step Example
Let’s value a primary care practice.
Step 1: Gather Financial Data
| Metric | Amount |
|---|---|
| Annual revenue | $1,200,000 |
| Operating expenses | $840,000 |
| Owner salary (market rate) | $250,000 |
| Interest, taxes, depreciation | $40,000 |
Step 2: Calculate EBITDA
EBITDA = Revenue – Operating Expenses (excluding owner salary, interest, taxes, depreciation)
| Item | Amount |
|---|---|
| Revenue | $1,200,000 |
| – Operating expenses | – $840,000 |
| EBITDA | $360,000 |
Note: We add back owner salary, interest, taxes, and depreciation to get true practice profitability.
Step 3: Determine Appropriate Multiples
Based on practice characteristics:
| Factor | Your Practice | Impact on Multiple |
|---|---|---|
| Specialty | Primary care | Lower (0.8x revenue, 4x EBITDA) |
| Growth trend | Growing 5%/year | Positive (+10%) |
| Payer mix | 60% commercial insurance | Positive (+5%) |
| Patient retention | 85% annually | Positive (+5%) |
Adjusted multiples:0.96x revenue or 4.8x EBITDA
Step 4: Calculate Value Using Revenue Multiple
$1,200,000 revenue × 0.96 =$1,152,000
Step 5: Calculate Value Using EBITDA Multiple
$360,000 EBITDA × 4.8 =$1,728,000
Step 6: Reconcile the Two Methods
Take weighted average (EBITDA method is more reliable):
| Method | Value | Weight | Weighted Value |
|---|---|---|---|
| Revenue method | $1,152,000 | 30% | $345,600 |
| EBITDA method | $1,728,000 | 70% | $1,209,600 |
| Final valuation | $1,555,200 |
Step 7: Adjust for Assets and Liabilities
| Item | Amount |
|---|---|
| Base valuation | $1,555,200 |
| + Medical equipment (at market value) | + $150,000 |
| + Inventory | + $20,000 |
| – Outstanding liabilities | – $100,000 |
| Final practice value | $1,625,200 |
What This Means
This primary care practice is worth approximately$1.6 million. At 1.35x revenue and 4.5x EBITDA, this is a fair market value for a healthy primary care practice with good patient retention and a favorable payer mix.
Factors that increase value:
- High-margin specialties (dermatology, ophthalmology)
- Growing patient base
- Commercial insurance over Medicare/Medicaid
- Electronic records and modern systems
- Long-term staff and provider relationships
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