Top KPIs That Increase Home Care Business Valuation
Introduction: Why KPIs Matter in a Home Care Sale
When it comes to selling your home care business, financials alone don’t tell the full story. Savvy buyers look beyond revenue and profit—they assess the overall health and scalability of your operation using key performance indicators (KPIs).
Improving these KPIs before going to market can significantly increase your business’s valuation and make it more attractive to qualified buyers.
1. Client Retention Rate
📈 Why It Matters:
High client turnover is a red flag. Buyers want proof that your clients are satisfied, loyal, and generating recurring revenue.
✅ How to Improve:
Track average client duration.
Implement client satisfaction surveys.
Provide consistency in caregiver-client matching.
Target Benchmark: 75%+ annual retention is considered strong in private-pay home care models.
2. Caregiver Retention Rate
📈 Why It Matters:
Your caregivers are the backbone of the business. High caregiver churn increases training costs, lowers client satisfaction, and scares off buyers.
✅ How to Improve:
Offer competitive wages and consistent hours.
Provide training and career development opportunities.
Build a culture of recognition and open communication.
Target Benchmark: A 12-month retention rate above 60% is considered healthy.
3. Revenue per Client
📈 Why It Matters:
This KPI shows how much income each client contributes on average. Buyers look for agencies with strong per-client revenue and potential to upsell services.
✅ How to Improve:
Encourage longer visit durations.
Introduce premium services (transportation, 24-hour care, care coordination).
Train staff to recognize upselling opportunities.
Formula: Total Revenue ÷ Number of Active Clients
4. Gross Margin
📈 Why It Matters:
Gross margin reflects the profitability of your core services before overhead costs. Low margins can signal poor pricing or cost management.
✅ How to Improve:
Review pricing strategies regularly.
Optimize caregiver scheduling to reduce overtime.
Limit use of high-cost temp staff when possible.
Target Benchmark: 35–50% gross margin is strong for private-pay agencies.
5. Billable Hours per Caregiver
📈 Why It Matters:
This measures caregiver productivity. More billable hours means better utilization and stronger top-line growth.
✅ How to Improve:
Minimize downtime between shifts.
Use scheduling software to fill open hours efficiently.
Reduce cancellations with proactive communication.
Target Benchmark: 25–35 billable hours/week per caregiver
6. Client Acquisition Cost (CAC)
📈 Why It Matters:
Buyers want to know how much you’re spending to win each new client. A high CAC with a low client lifetime value hurts ROI.
✅ How to Improve:
Track marketing channel performance.
Improve lead conversion processes.
Invest in referral relationships to reduce advertising spend.
Formula: Total Sales & Marketing Spend ÷ Number of New Clients Acquired
7. Lifetime Value (LTV) of a Client
📈 Why It Matters:
LTV estimates how much revenue a client generates before churning. When this is high and your CAC is low, buyers know the model is profitable and repeatable.
✅ How to Improve:
Increase service utilization per client.
Focus on long-term relationships through quality care.
Reduce client attrition through proactive engagement.
Formula: Average Monthly Revenue per Client × Average Client Lifespan in Months
8. Percentage of Private Pay vs. Government Payers
📈 Why It Matters:
Buyers tend to favor a higher share of private pay clients, as they offer higher margins and less regulatory complexity than Medicaid or VA programs.
✅ How to Improve:
Rebalance your marketing efforts toward private pay demographics.
Partner with senior living communities or elder law attorneys.
Target Benchmark: 70%+ private pay is ideal, depending on your market.
9. Revenue Growth Rate (Year-over-Year)
📈 Why It Matters:
Consistent growth over time reassures buyers that your agency is positioned for future success.
✅ How to Improve:
Expand geographic coverage.
Add service lines (e.g., live-in care, transitional care).
Increase client acquisition through digital marketing.
Target Benchmark: 10–20%+ annual growth is considered strong.
Conclusion: Start Measuring What Matters
If you're preparing to sell your home care business—or just want to know what it's worth—start tracking and improving these KPIs now. The earlier you begin, the more time you have to course-correct and maximize your valuation.
💬 Want help benchmarking your business or preparing for a future sale?
Contact Home Care Business Brokerage for a confidential consultation and free KPI audit today.