Business Valuation Guide
Most home health agencies sell for 2.0x to 3.6x Seller's Discretionary Earnings, with the midpoint near 2.8x. A home health agency with $250,000 of SDE would typically fall between $500,000 and $900,000.
Home health agencies are valued on earnings like other healthcare businesses, but the transaction is dominated by regulation. Licensure, Medicare certification and in some states a certificate of need all have to survive the change of ownership, and that process, not the negotiation, sets the timeline.
Curtis Hinds answers two questions home health agency owners ask most. Listen, or read below.
Payer mix is one of the first things a buyer asks for. Medicare usually pays best for skilled home health, and Medicare certification is hard to get, so the buyer is paying for the certification as much as for the patients.
Medicaid rates are set by the state. They're lower, and they can change with the state budget. An agency that runs mostly on Medicaid usually sells toward the bottom of the range, closer to two times earnings.
Private pay can have good margins, but it depends on marketing, and a family can stop paying any month.
The agencies that sell best have a mix. No single payer, and no single hospital sending referrals, holds the whole business up.
The change of ownership. Medicare and the state both have to approve the new owner, and that can take nine to fifteen months. Deals fall apart when the seller didn't plan for that and the buyer's financing or patience runs out.
Medicare also has a thirty-six month rule. If your agency was certified, or changed owners, in the last three years, a sale can force the buyer to go through certification again. Check that before you list.
Then the paperwork. Recent survey problems, or billing that wouldn't hold up in an audit, will come out in due diligence, and they cut the price or end the deal.
On staffing, buyers look at caregiver turnover. If you're replacing half your aides every year, the buyer prices in that cost.
Start with Seller's Discretionary Earnings (SDE): net profit plus the owner's pay and perks, interest, depreciation and one-time costs.
Then apply the industry multiple. For home health agencies that band runs 2.0x to 3.6x, and where a specific business lands inside it is decided by the factors below. Typical SDE margin for this category runs around 18% of revenue, which is a useful sanity check: if your margin is far off that, the multiple moves with it.
Above roughly $1M to $2M of EBITDA the buyer pool changes. Individual buyers give way to private equity platforms and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x rather than a multiple of SDE.
Regional home health and hospice groups, private-equity-backed healthcare platforms, and healthcare operators entering a new state where a certificate of need makes acquisition the only practical route.
A typical sale runs 9 to 15 months from going to market to closing, assuming your financials are ready when you start. 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.
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 license 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.
SDE times the industry multiple. For home health agencies that multiple is 2.0x to 3.6x, so $250,000 of SDE points to $500,000 to $900,000. Recorded sales of similar businesses serve as a cross-check, and the equipment and inventory value usually sets the floor.
Yes, at the top of this page. It applies the 2.0x to 3.6x band for home health agencies, adjusted for owner hours, margin and years in business, and returns a range rather than one number.
To decide whether to sell a home health agency, a market valuation: what a buyer would likely pay. A certified appraisal is usually needed only for divorce, estate, tax, litigation or a buyer's SBA loan, and costs far more.
Multiples reflect broker transaction data including the BizBuySell Insight Report and aggregated 2024-2025 USA small business sales, and mirror the bands used by the Exit Ready valuation calculator. They are planning estimates, not a formal appraisal, and not investment advice. Market multiples move; this page was last updated 2026-08-19.