What Is a Home Health Agency Worth?

Most home health agencies sell for roughly 2.0x to 3.6x Seller's Discretionary Earnings. Agencies with Medicare certification and a certificate of need in a limited state sit at the top of that band, sometimes above it, because the licence itself is hard to replicate.

Longer than owners expect. Medicare change-of-ownership review commonly runs several months and state licensure adds more. Plan for nine to fifteen months overall, and start the regulatory conversation at letter of intent rather than at closing.

Significantly, in states that require one. Where a buyer cannot simply start a new agency, buying an existing licensed one is the only route in, and that scarcity is reflected directly in the price.

There is no single average, because price tracks earnings rather than revenue. At the midpoint multiple of 2.8x SDE, home health agencies at $500,000 of SDE sell around $1,400,000, and at $1,000,000 of SDE around $2,800,000. Typical SDE margin in this category runs near 18% of revenue, so a home health agency doing $1,000,000 in revenue would often carry about $180,000 of SDE and land near $504,000.

Take your Seller's Discretionary Earnings and multiply by 2.0x to 3.6x. Where you land inside that band is decided by owner dependence, customer concentration, recurring revenue and the quality of your books. A home health agency at the top of the range looks materially different from one at the bottom, and most of those differences can be improved in the twelve months before a sale.

SDE multiples of 2.0x to 3.6x apply to owner-operated home health agencies. Once earnings pass roughly $1M to $2M of EBITDA the buyer pool shifts to private equity and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x. The two are not comparable: SDE includes the owner's compensation and EBITDA does not, so the same business shows a higher SDE multiple than EBITDA multiple.

Typically 9 to 15 months from going to market to closing, assuming financials are ready. Licensure and Medicare certification transfer is the whole timeline. Change-of-ownership review can take many months, and in some states a certificate of need makes an existing agency far more valuable than starting one.

There is no formula unique to home health agencies. The method is the same one used across small business sales: recast earnings into Seller's Discretionary Earnings, then multiply by the industry band, which for home health agencies is 2.0x to 3.6x. Three valuation methods exist in principle. The income approach, applying a multiple to earnings, is what nearly every real transaction uses. The market approach compares against recorded sales of similar businesses and works as a cross-check. The asset approach values equipment and inventory and generally sets a floor rather than a price.

Yes. The calculator on this page applies the same 2.0x to 3.6x band used throughout this guide, adjusted for owner dependence, margin quality and business age. It takes five inputs and returns a market range rather than a single figure, because real transaction prices move with deal structure and buyer type.

A market valuation estimates what a buyer would likely pay and is what you need to decide whether to sell. A formal appraisal is a certified document prepared to a defined standard, and is normally required only for litigation, divorce, estate and tax matters, or an SBA loan on the buyer's side. For planning an exit, a market valuation is the right instrument and is far cheaper.