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Practice transitions · Valuation
Plug in your annual collections, specialty, provider count, and earnings. This calculator runs the two methods buyers actually use — a multiple of revenue and a multiple of seller's discretionary earnings (SDE) — and returns a ballpark value range, plus which method is driving the number. Independent — GetPracticeHelp does not buy or sell practices.
Most small practices are valued two ways and the buyer triangulates between them. The revenue method applies a multiple to annual collections — roughly 0.5–1.0x for medical practices (higher, around 60–80% of collections, for dental), lower for owner-dependent or contract-based specialties and higher for procedural, high-demand ones like dermatology, ophthalmology, and orthopedics. The SDE method applies a multiple of about 1.7–3.5x to seller's discretionary earnings (net profit plus owner compensation and add-backs). For a profitable practice the SDE method usually sets the price; for a thin-margin one the revenue method anchors it.
SDE — seller's discretionary earnings — is what the practice actually puts in one owner's pocket: net profit plus the owner's salary and benefits, plus one-time or discretionary expenses a new owner wouldn't carry (add-backs). Buyers pay a multiple of SDE because it measures the cash a single working owner can expect. A practice doing $1.2M in collections with $300K SDE is worth far more than one doing $1.2M with $90K SDE, even though revenue is identical.
Multiples rise with size (more providers, less owner-dependence), a favorable payer mix, a recurring patient base, transferable contracts, and procedural revenue. They fall with heavy reliance on the selling owner, a single dominant payer, declining collections, deferred equipment or lease problems, and specialties with thin margins. Two practices in the same specialty can be a full turn of SDE apart on these factors alone.
No. It is a ballpark estimate built on industry rule-of-thumb multiples, not a formal valuation or appraisal. It does not review your financial statements, payer contracts, lease, equipment, or chart base. Before selling, buying, or using a number for partnership buy-in, financing, or a divorce or estate matter, get a formal valuation from a credentialed practice-valuation firm or accredited appraiser.
Because a real sale price lands inside a range, not on a point. The two methods rarely agree exactly, specialty and size move the multiple, and the final number depends on deal terms — earnouts, real estate, transition period, and how clean the books are. The range is the defensible answer; a single figure would imply a precision this tool does not have.
Yes, and it can change it a lot. The revenue and SDE methods here price an owner-operated practice. Once a practice is large enough that earnings don't depend on one owner — multiple providers, a management layer, transferable payer contracts — strategic and private-equity buyers value it on EBITDA instead. Single-site practices trade around 3–8x EBITDA; at platform scale, high-demand specialties (dermatology, ophthalmology, cardiology, gastroenterology, orthopedics) reach 8–20x. Those multiples sit well above small-practice rules of thumb, but they apply to scaled, lower-owner-dependence operations — and capturing that premium is precisely when a formal valuation is worth paying for.