Maximizing Your Legacy: Key Financial Metrics for a High-Value Home Care Exit
In the home care industry, your business is more than just a balance sheet—it is a promise of Continuity of Care for your community. However, when it comes time to plan your exit, transitioning that Legacy requires a deep understanding of the financial metrics that drive Home Care Valuation.
At Home Care Business Brokerage, led by Managing Directors Matt Lowd and Dave Carlson, we specialize in helping owners move from operation to acquisition. Whether you are Selling a Hospice, a Private Duty agency, or a behavioral health firm, these eight metrics are exactly what high-value buyers are looking for in 2026.
1. EBITDA and Adjusted Earnings
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the most critical metric for determining your sale price.
Why It Matters: It reflects the true operational profitability of your agency.
The M&A Strategy: We look for "add-backs"—one-time expenses that, when removed, increase your bottom line and your overall Valuation.
2. Revenue Growth and Patient Census
Buyers aren't just buying your past; they are buying your future.
Patient Census: A growing or stable census indicates a healthy reputation and market demand.
The Trend: Consistent year-over-year revenue growth proves that your agency is scalable and resistant to market shifts.
3. Caregiver Retention and Labor Costs
In 2026, labor is the biggest challenge in healthcare. Efficiently managing Medicare Reimbursement while maintaining high Caregiver Retention is a sign of a premium business.
Target Metrics: Payroll should typically fall between 50-60% of revenue.
The "Stickiness" Factor: High retention rates ensure that a buyer won't lose the workforce—the most valuable asset—immediately after the sale.
4. Payer Mix and Medicaid Waivers
A diversified revenue stream protects your Legacy from regulatory changes.
High-Value Mix: A healthy balance between Private Pay, Long-Term Care Insurance, and Medicaid Waivers is ideal.
Risk Mitigation: Over-reliance on a single payer source can be a red flag during due diligence.
5. Accounts Receivable (AR) Aging
How quickly do you get paid? Clean billing is essential, especially in states with strict CON Laws.
The Goal: A low percentage of overdue accounts (90+ days) shows strong cash flow management.
Audit Readiness: Clean AR records give buyers confidence that there are no hidden billing liabilities.
Quick Check: Is Your Agency "Exit-Ready"?
The High-Multiple Agency
EBITDA margins of 15% or higher.
Diversified Patient Census with no single-source reliance.
Documented systems for Continuity of Care.
Low caregiver turnover compared to industry benchmarks.
The "At-Risk" Agency
Declining revenue or stagnant growth over 24 months.
Labor costs exceeding 65% of total revenue.
Messy financial records or high AR delinquency.
Owner-dependent operations (the business can't run without you).
Frequently Asked Questions (FAQ)
What is the average multiple for a Home Care Valuation? Multiples vary based on size, location, and payer mix, but most high-performing agencies in 2026 see multiples ranging from 4x to 7x EBITDA.
How does caregiver turnover affect my sale price? Significant turnover increases "operational risk" for the buyer. Improving your Caregiver Retention for 12 months prior to a sale can significantly boost your valuation.
Why should I use a broker instead of selling privately? A specialized broker understands the nuances of healthcare M&A, ensuring you don't leave money on the table while protecting your staff and clients during the transition.
Recap: Planning Your Next Chapter
Understanding these metrics is the first step toward a successful exit. By focusing on profitability, retention, and compliance today, you ensure your business remains a pillar of the community for years to come.
If you are ready to sell your business or need a professional assessment of your financial health, Contact us today for a confidential consultation.