FOCUS Investment Banking specializes in healthcare M&A advisory and has completed more than thirty physician practice and ASC transactions with private equity buyers.
Medical Practice Valuation Calculator
October 28, 2026
The FOCUS Medical Practice Valuation Calculator turns your practice’s adjusted earnings into an estimated enterprise value range. It uses illustrative multiples for physician practices in your specialty in deals with private equity buyers. Many owners first hear a valuation when a buyer sends a letter of intent, so an independent estimate lets you compare that offer with market benchmarks. Since each practice and transaction is unique, the calculator is intended for estimation purposes only. Investment bankers at FOCUS can provide a more in-depth valuation.
Medical Practice Valuation Calculator
Enter figures from your trailing twelve-month financial statements.
Choose the specialty that produces most of your collections.
Platform pricing is generally reserved for PE-backed organizations and very large groups. Most practices are add-ons.
Enter net collections for the trailing twelve months.
Use EBITDA from the same twelve-month statements. Enter a minus sign for a loss.
Include every dollar the practice paid its physician owners this year. Only include salary, bonus, and benefits payment. Do not include distributions, which should already be included in your reported EBITDA.
Estimate what employed physicians would earn for the same workload. Include the total for all physician owners.
Count only expenses a buyer will not incur after closing. Leave blank if none apply.
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Intended for educational purposes only and not a guarantee of any outcome. EBITDA multiples presented are based on banker guidance and experience. Each transaction is unique.
How the Calculator Estimates Your Practice Value
Our Medical Practice Valuation Calculator uses three calculations to estimate your practice value and cross-check that estimate against revenue:
|
Adjusted EBITDA = Reported EBITDA + Owner Compensation Paid − Market-Rate Physician Compensation + Add-Backs |
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EV Range = Adjusted EBITDA x Low Multiple to Adjusted EBITDA x High Multiple |
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Revenue Cross-Check = Annual Collections × Low Revenue Multiple to Annual Collections × High Revenue Multiple |
Where the Benchmarks Come From
The calculator uses the FOCUS Healthcare Valuation Benchmarks, published separately. In creating these benchmarks, FOCUS pairs published third-party transaction research with guidance from its internal bankers.
Assumptions and Limits
The calculator assumes physician owners will keep practicing after the sale under employment agreements at market-rate pay, which is common in private equity transactions. Base the market-rate figure on what you would pay to recruit an employed physician in your specialty and region, who would handle your clinical volume. This is often a percentage of collections (e.g., 30-35% of personally-performed collections in ophthalmology).
The calculator does not account for many factors that are highly relevant to valuation. For example, it does not consider deal structure, location, provider roster, ancillaries, payor mix, procedure mix, growth potential, and many other risk and value factors. Each practice is unique, so an accurate valuation requires in-depth analysis and a conversation with a specialized investment banker.
Valuation Benchmarks by Medical Specialty
Platform multiples are not relevant to most groups considering a sale. Instead, they apply to very large practices, often when acquired by a private equity firm to create a new company, or “platform” (which is where the term comes from). These ranges are also more likely to apply when a PE firm sells a platform after growing it organically and through further practice acquisitions over 5-7 years. Such a platform might have $20M or more in EBITDA. Most practices today sell at add-on multiples, which generally apply when a practice is sold to an existing PE-backed platform. These multiple ranges are appropriate for all but the largest practices.
Still, platforms may sell outside the platform multiple ranges, and add-ons may sell above the add-on ranges. Each transaction and practice is unique, so these ranges are provided for educational purposes only.
| Specialty | Platform (EV/EBITDA) | Add-On (EV/EBITDA) | Revenue Multiple |
Key Value Driver |
| Dermatology | 12–15× | 4–9× | ~2.2–3.5× | A higher cosmetic revenue mix drives a premium |
| Ophthalmology (incl. retina) | 14–20× | 7–11× | ~1.0–1.6× | Surgery center ownership lifts valuations |
| Cardiology | 12–15× | 8–12× | ~1.0–1.6× | Limited independent supply keeps buyer demand high |
| Gastroenterology (GI) | 10–14× | 7–9× | ~0.9–1.5× | Endoscopy center ownership boosts valuations |
| Orthopedics & sports medicine | 9–13× | 6–9× | ~0.9–1.5× | Imaging ancillaries lift valuations |
| Women’s health (OB/GYN) | 10–14× | 5–8× | ~0.9–1.5× | Fertility programs drive a premium |
| Behavioral health | 9–13×+ | 3–8× | ~0.8–1.4× | In-network, multi-state models earn a premium |
| Primary care / multi-specialty | 8–12× | 3–6× | ~0.8–1.6× | Success in value-based care contracts lifts multiples |
| Medical spa / aesthetics | 7–12× | 3–8× | ~1.0–1.8× | Recurring membership revenue strengthens the cash-pay model |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Factors That Set Your Multiple Within the Range
Two practices in the same specialty can trade at opposite ends of a range, depending on size, location, and many other factors. Common value drivers are listed below:
|
Value Driver |
What Buyers Review |
Effect on the Multiple |
| Owner dependence | Share of collections generated by owner physicians | Heavy reliance on one physician creates retention risk and can result in a lower valuation |
| Payer mix | Includes diversity of revenue sources, plus key payor types like government, workers compensation, and attorney/personal injury. | Generally, diversified and in-network commercial revenue is the most desirable, along with cash pay revenue in appropriate specialties. Government revenue share benchmarks depend on specialty. Other revenue (including out-of-network, workers compensation, personal injury, etc.) may be less desirable. |
| Ancillary services | Revenue beyond office visits, such as imaging or facility fees | Ancillary revenue often supports a premium multiple |
| Provider depth | Number of non-owner revenue-generating clinicians | A deeper bench reduces risk when an owner retires or slows down |
| Financial records | Monthly accrual-basis statements that reconcile to tax returns | Clean records shorten diligence and limit price adjustments |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Worked Example: Cardiology Group Valuation
A hypothetical cardiology group collects $30 million annually. It reports $700,000 in EBITDA after paying its five physician-owners $6 million. Comparable market-rate compensation for the same clinical work totals $3 million, and the accountant identifies $300,000 in personal expenses the practice paid.
|
Calculation Step |
Amount |
| Reported EBITDA | $700,000 |
| Plus owner compensation paid | $6,000,000 |
| Minus market-rate physician compensation | ($3,000,000) |
| Plus personal expense add-backs | $300,000 |
| Adjusted EBITDA | $4,000,000 |
| Add-on value range (8–12×) | $32M–$48M |
| Platform value range (12–15×) | $48M–$60M |
| Revenue cross-check (~1.0–1.6×) | $30M–$48M |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Frequently Asked Questions
Enterprise value reflects the total valuation of your practice. In most deals, enterprise value is paid mostly in cash and the remainder as “rollover equity,” which is an ownership interest in the buyer’s organization. Some transactions may include earnouts or a form of seller financing. The amount paid at closing will be reduced by any debt you have, which is usually required to be paid off at closing. Other items, such as an indemnification escrow, can also reduce the cash you receive at closing.
These transactions are complex, so it makes sense for sellers to work with experienced financial and legal advisors. Those advisors will work to maximize proceeds while limiting risk for the seller, especially cash at close.
Use trailing twelve-month EBITDA because buyers base initial offers on documented results. A credible three-year plan with physician recruitment targets can support a higher multiple, especially with multiple bidders. Advisors will also work to normalize growth opportunities in progress, such as a new provider who was ramping during the last twelve months.
Typically, this means that the owners’ current proceeds from the practice are similar to or lower than what they would be paid post-transaction for the clinical services they provide. There is no excess profitability beyond market-rate compensation, and thus no transaction EBITDA.
No. The estimate covers the operating practice only. Many physicians who own their practice or ASC buildings keep them as a passive investment and lease them to the buyer. Others sell the buildings to focused real estate investors concurrent with their practice sale. Importantly, if you own your building, you should confirm whether the rent you pay is set at fair market value. If not, your EBITDA calculation will require the appropriate adjustment.
Written by
Eric Yetter
Managing Director
Eric Yetter is an investment banker focused on healthcare provider services. Eric has completed a variety of healthcare transactions, many with private equity firms and PE-backed companies. His past clients include leading physician and dental groups, behavioral health companies, healthcare facilities, and institutional healthcare investors.
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Andy Snyder
Managing Director
Andy Snyder joined FOCUS in 2021 and serves as a Managing Director. During his investment banking career, he has worked on mergers and acquisitions, capital raises, and strategic advisory assignments for a wide range of healthcare companies. His current practice includes healthcare provider services, behavioral health, healthcare facilities, healthcare IT, and medical technology.
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Managing Director
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