2026 Healthcare M&A Report: EBITDA / SDE Valuation Multiples for Home Health, Hospice, and Private Duty
The "Silver Tsunami" has officially arrived. As we move through 2026, the demand for home-based clinical services has transformed the healthcare M&A landscape into a high-stakes, high-multiple environment. For owners of Home Health agencies, Hospice platforms, and Private Duty firms, the window for a premium exit is wide open—but only for those who understand the new math of healthcare valuation.
At Home Care Business Broker (HCBB), we specialize exclusively in the healthcare continuum. We understand that your agency isn't just a business; it’s a clinical ecosystem. This guide breaks down the 2026 benchmarks for EBITDA and SDE multiples and explores the deal structures currently being utilized by Private Equity and Strategic Buyers.
1. The Valuation Baseline: SDE vs. EBITDA
In healthcare, the transition from an SDE valuation to an EBITDA valuation is often triggered by "Clinical Autonomy"—the ability of the agency to pass a state survey or audit without the owner being the primary point of contact.
SDE (Seller’s Discretionary Earnings)
Typical User: Smaller, lifestyle-focused agencies with revenue under $3M.
The Logic: This represents the total "Benefit to Owner." It is used when the owner still wears many hats (Administrator, Clinical Director, or Lead Marketer).
2026 Benchmark: 3.0x – 4.0x.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Typical User: Scaled agencies ($5M–$75M) with a robust middle-management layer (Director of Nursing, HR Manager, Quality Assurance Team).
The Logic: Institutional buyers view this as a "Platform" or "Add-on." To get an EBITDA multiple, the business must demonstrate operational maturity independent of the founder.
2026 Benchmark: 6.5x – 12.0x+ (depending on sub-sector and payor mix).
2. 2026 Sub-Industry Deep Dive
The "Payor Mix" (who pays you) is the single largest driver of your multiple.
Medicare-Certified Home Health
In 2026, Home Health agencies are being valued on their ability to reduce hospital readmissions.
EBITDA Multiples: 7.5x – 9.5x.
Value Driver: The "Star Rating" is the new currency. Agencies with 4.5 or 5 stars command a 1.5x multiple premium because they represent lower regulatory risk for the buyer.
Hospice & Palliative Care
Hospice remains the "Crown Jewel" of healthcare M&A due to its predictable margins and high barrier to entry (Certificate of Need states).
EBITDA Multiples: 9.0x – 12.5x.
Value Driver: "Average Length of Stay" (ALOS) and "Census Growth." Buyers in 2026 are looking for platforms that can serve as a hub for palliative care transitions.
Private Duty (Non-Medical/Private Pay)
Private pay is favored for its lack of reimbursement risk (no waiting on Medicare/Medicaid).
SDE Multiples: 3.5x – 4.5x.
EBITDA Multiples: 6.0x – 8.0x.
Value Driver: Recruitment and Retention. If you have a proprietary caregiver training program or a turnover rate 20% lower than the national average, your multiple expands.
Behavioral Health & ABA Therapy
This sector is seeing massive consolidation in 2026 as Private Equity firms "roll up" smaller providers.
EBITDA Multiples: 7.0x – 10.0x.
Value Driver: Utilization rates and credentialing speed.
3. Sophisticated Deal Structures in Healthcare
A "10x Multiple" is often a hybrid of cash, debt, and future promises. In 2026, we are seeing three primary structures:
The "Clinical Quality" Earn-out
In healthcare, earn-outs aren't just about money; they are about compliance.
How it works: A portion of the sale price is held back for 12–24 months. To receive it, the agency must maintain its "Star Rating" or pass a "Post-Close Audit" with zero high-level deficiencies.
Rollover Equity (The "Second Bite")
Private Equity groups buying "Platform" agencies ($20M+ revenue) almost always require the seller to keep 10%–20% equity.
The Advantage: This aligns the seller’s interests with the buyer’s. When the PE firm sells the entire consolidated group 4 years later, the seller’s 20% "rollover" can often be worth more than the original cash they took at the first closing.
Seller Notes with PIK Interest
A Seller Note is a loan the seller gives to the buyer. In 2026, we frequently use PIK (Payment-in-Kind) Interest, where the interest is added to the principal of the loan rather than paid in cash monthly. This helps the buyer's cash flow while significantly increasing the seller's total payout upon the final maturity of the note.
4. 2026 Value Killers: What Drops Your Multiple?
Even in a hot market, certain factors can "tank" a healthcare valuation:
ADR (Additional Development Requests): Excessive Medicare audits.
High Caregiver Turnover: If you are losing more than 50% of your staff annually.
Payor Concentration: If 80% of your revenue comes from a single Managed Care contract that is up for renewal.
Poor Documentation: If your clinical notes won't stand up to a rigorous third-party "Quality of Earnings" (QofE) review.
Conclusion: Engineering the Premium Exit
At Home Care Business Broker, we don't just list businesses; we curate exits. By leveraging the resources of our parent firm, SeaRidge Advisory, and our operational experts at The Alignment Firm, we ensure your agency is positioned for the highest possible multiple.
Don't leave your legacy to chance. Understand your market value today.