Home Health and Hospice Agency Valuation
29 valuation methods · 43 industries · Results in under 10 minutes
In short
A home health or hospice agency is valued on normalized EBITDA, with one-off costs such as a spell of expensive agency staffing added back. VA chooses the multiple from the payer mix, which for most agencies is weighted to Medicare and Medicaid.
Who this is for
Owners of Medicare-certified home health and hospice agencies, and of private-duty home care companies, preparing to sell to a regional or national operator, and buyers who need earnings normalized and payer mix read correctly.
How is a home health or hospice agency valued?
VA values a home health or hospice agency on normalized EBITDA: earnings after the add-backs you confirm in the wizard, such as a one-off period of expensive agency staffing, so a single year's cost does not set the value. The multiple is then chosen from the agency's payer mix, because commercial plans pay more than government programs for the same care. A discounted cash flow checks the result, and comparable companies and precedent transactions sit alongside it. This tool is informational only. Output is driven by your inputs and does not constitute a formal appraisal or certified valuation.
What drives the value of a home health or hospice agency?
- Average daily census for hospice, and admissions and recertifications for home health
- Payer mix between Medicare, Medicaid, commercial plans and private pay
- Referral sources, from hospitals, physicians and senior living communities
- Clinician recruiting and retention, and reliance on agency staff
- Quality ratings and a clean survey and audit history
- Length of stay and diagnosis mix, which affect how predictable revenue is
What lowers the value of a home health or hospice agency?
- A payer mix weighted to Medicaid, whose rates can be cut
- Reliance on expensive agency staff to cover shifts
- Referrals concentrated in one or two hospitals
- Survey findings or licensing issues a buyer would inherit
How much is a home health or hospice agency worth? A worked example
Government payers and the multiple
A home health agency has $900 K of normalized EBITDA, with 20% of revenue from commercial insurers and the rest from Medicare and Medicaid. The healthcare model applies its government-heavy range, 4× to 6× with 5× in the middle: about $4.5 M before debt and before its discounted cash flow check. At 35% commercial, the range moves to 5.5× to 7.5× and the value to about $5.85 M.
Illustrative figures from the industry model alone. A full report blends it with a discounted cash flow, comparable companies and precedent transactions.
Value your home health or hospice agency in under 10 minutes
- 1.Upload your financial statements, or type the figures in.
- 2.Confirm the add-backs and the industry details the model asks for.
- 3.Get a valuation range, the methods behind it and a PDF memorandum.
Which numbers matter most?
Normalized EBITDA
Earnings before interest, tax, depreciation and amortization, after the add-backs you confirm. It is the figure the multiple is applied to.
Commercial payer mix
The share of revenue from commercial insurers rather than government plans. It sets which multiple VA applies to normalized EBITDA.
Patient volume
Census and visits show how much care the agency delivers and how steady it is.
Days in receivables
How long payers take to pay. A long collection cycle ties up cash a buyer has to fund.
Growth in established locations
Growth from existing branches rather than new ones, which buyers read as proof the model works.
What do you need to value a home health or hospice agency?
- Profit and loss statements and balance sheets, ideally for the last three years
- Figures for the current year to date
- A list of add-backs: the owner's pay and perks, and any one-off costs
- Loan and lease balances
- Revenue by payer: Medicare, Medicaid, commercial insurers and private pay
- Staffing costs by month, marking any period of agency staff
- Days of revenue outstanding in receivables
Example scenarios
A year with agency nurses
An agency covered staff shortages with agency nurses for part of the year, and its earnings fell. Entering that cost as a one-off add-back in the wizard means the value reflects what the agency earns with its own staff.
Medicare against commercial plans
Two agencies earn the same, one paid almost entirely by Medicare and one with a meaningful share of commercial plans. VA applies a higher multiple to the second, because its revenue is paid at higher rates.
Further reading
How to Value a Dental Practice: Collections, EBITDA, and What DSOs Actually Pay
Dental practice valuation explained: the percentage-of-collections rule, when EBITDA multiples take over, what drives DSO offers, and a worked example for a $900K practice.
Is a Business Worth 3 Times Profit? When It Is 2x, When It Is 5x, and Which Profit Counts
Is a business worth 3 times profit? Often, if the profit is SDE. When 2x or 5x applies instead, which profit counts, and what diligence does to the price.
How Much Is a Business Worth With $500,000 in Sales? The Revenue Ladder From $100K to $3 Million
Revenue does not set a price, earnings do. See what businesses at $100K, $200K, $300K, $500K, $1M, $2M and $3M in sales are worth at 10%, 20% and 30% margins.
Frequently asked questions
Why does payer mix change the multiple?
Government programs pay less than commercial plans for the same care. VA reads the share of revenue from commercial insurers and applies a multiple to match.
Does a bad staffing year hurt my value?
Only if it goes in as normal. Add the one-off staffing cost back in the wizard and the normalized EBITDA reflects what the agency earns with its own staff.
Is hospice valued differently from home health?
The model uses the same approach for both. What separates them in the result is their earnings and payer mix, and buyers' views of each show up in the precedent transactions in the report.
Is this a certified appraisal?
No. This is an informational estimate. A bank loan, a partner buyout or an estate matter may require a certified business appraisal, which this does not replace.
Is hospice valued differently from home health?
Both run on the same healthcare model: normalized EBITDA times a multiple chosen from the payer mix. Hospice revenue is mostly Medicare, which places it in the government-heavy range.
How do slow collections affect the value?
Receivables above about two months of revenue lower the multiple, and above three months the model applies a larger cut, because some billed revenue may never be collected.
Terms used on this page
- Normalized EBITDA
- EBITDA after add-backs, so it shows what the business earns in a normal year under a new owner.
- Add-backs
- Costs added back to reported earnings because a new owner would not bear them: personal expenses run through the business, one-off costs, or owner pay above what the role would cost to fill.
- Payer mix
- The split of a practice's revenue between commercial insurers, government plans such as Medicare and Medicaid, and patients who pay directly.
- Enterprise value
- The value of the business itself, before debt is subtracted and cash added. The owner's proceeds come from what is left.
As featured in
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Last reviewed September 25, 2026 against VA's valuation models.