Skilled Nursing and Memory Care Valuation
29 valuation methods · 43 industries · Results in under 10 minutes
In short
A skilled nursing facility or memory care community is valued on normalized EBITDA times a multiple chosen from its payer mix: the more revenue from commercial plans and managed care, the higher the band. Occupancy, staffing and inspection results shape what buyers pay.
Who this is for
Owners and operators of skilled nursing facilities, memory care communities and assisted living with care services, preparing to sell, refinance or bring in a partner, and buyers who need payer mix, occupancy and staffing read with the earnings.
How is a skilled nursing facility valued?
VA values a skilled nursing facility or memory care community on normalized EBITDA: earnings after the add-backs you confirm, such as a period of expensive agency staffing, so a single year's cost does not set the value. The multiple is then chosen from the payer mix, because commercial insurers pay more than government plans 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 skilled nursing facility?
- The payer mix: Medicaid, Medicare, commercial and managed care plans, and private pay
- Occupancy, and how steady it has been through the year
- Staffing: agency use, overtime and turnover among nurses and aides
- Survey and inspection results, and any penalties or open findings
- Whether the operator owns the building or leases it, and the rent against the market
- Local competition and referral relationships with hospitals
What lowers the value of a skilled nursing facility?
- Most residents paid for by Medicaid, whose rates can be cut
- Heavy use of agency staff and high turnover
- Open inspection findings or penalties
- A lease at rent above the market, or one that ends soon
How much is a skilled nursing facility worth? A worked example
Government payers and the multiple
A skilled nursing facility has $2 M of normalized EBITDA, with 20% of revenue from commercial insurers and the rest from government plans. VA's healthcare model applies its range for that mix, 4× to 6× with 5× in the middle: about $10 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 $13 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 skilled nursing facility 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
EBITDA after the add-backs you confirm, such as resetting an owner-clinician's pay to what the clinical work would cost to hire. The payer-mix multiple applies to it.
Payer mix
The share of revenue from commercial insurers rather than government plans. It chooses the band of multiples VA's healthcare model applies: the higher the commercial share, the higher the band.
Occupancy
The share of beds or units filled. It drives revenue against a largely fixed cost base, so buyers read it first.
Agency staffing share
Nursing hours covered by agency staff. High agency use depresses earnings; if it was a one-off, confirm it as an add-back.
Survey results
State inspection findings and penalties. Poor results can limit admissions and payer contracts, which buyers price in.
What do you need to value a skilled nursing facility?
- 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 and resident days by payer, including private pay
- Occupancy by month for the last two years
- State survey results and staffing reports
Example scenarios
A facility paid mostly by Medicaid
Most of a facility's residents are paid for by Medicaid. VA's healthcare model applies its lower band of multiples, and the worked example shows how a larger share of commercial and managed care residents moves the value.
A year of expensive agency staff
A staffing shortage forced a facility to use agency nurses for most of a year. If that has ended, confirm the extra cost as an add-back so one bad year does not set the value; a buyer will check that staffing has recovered.
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.
How to Value an HVAC Business in 2026: SDE and EBITDA Multiples
HVAC businesses sell for about 2x to 3.3x SDE for small shops and 5x to 9x EBITDA for larger firms. See 2026 multiples by size and what drives the number.
Add-Backs Explained: Which Adjustments Survive Diligence
Add-backs adjust reported earnings to reflect true business profitability. Learn which add-backs buyers accept, which they reject, and how normalization affects the valuation.
Frequently asked questions
How is a skilled nursing facility valued?
On normalized EBITDA times a multiple chosen from the payer mix. A discounted cash flow checks the result, and comparable companies and precedent transactions sit alongside it.
Why does payer mix change the value?
Commercial insurers usually pay more for the same visit than Medicare or Medicaid, and government rates can be cut by regulation. VA's healthcare model moves to a higher band of multiples as the commercial share rises.
How is private-pay revenue treated?
The payer field in VA asks for the share of revenue from commercial insurers, and there is no separate field for private pay. Private-pay rates are set by the market rather than by government, so buyers usually value them closer to commercial revenue; say how you entered it when you share the report.
Is the real estate part of the value?
The operating business and the building are separate. Value the operations on earnings after a market rent; if you own the building, it is valued on its own and can be sold or leased to the buyer.
Does occupancy change the value?
It changes the earnings the model values, because costs are largely fixed. Buyers also read the occupancy trend, since a facility filling up is worth more than one losing residents.
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.
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.
- Valuation multiple
- The number earnings are multiplied by to reach a value. It rises with how durable the earnings are and how easily a new owner can keep them.
- Enterprise value
- The value of the business itself, before debt is subtracted and cash added. The owner's proceeds come from what is left.
- Precedent transactions
- A method that values a business at the multiples paid in past sales of similar companies.
As featured in
Value your skilled nursing facility
Get a valuation range with the methods behind it and a PDF memorandum in under 10 minutes.
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Last reviewed September 26, 2026 against VA's valuation models.