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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Medical Business Valuation Issues 

The Medical sector is part of the larger health care and social services industry that has grown by more than 4% pa in the past five years.  It includes:

  • General practices

  • Dental, optometry and ophthalmology services

  • Physiotherapy services

  • Hospital services

  • Aged care and social services​

For medical practice business valuations, there is often the notions of  professional goodwill  and practice goodwill.  Professional goodwill is the degree to which revenue is based on the the individual practitioner’s reputation, trust and the reliance of patients on the person rather than the practice. 

 

Practice” goodwill relates to the business' ability to generate ongoing EBITDA without relying on key medical practitioners. 

 

Key factors that influence the business valuation include location, integrated IT systems, key staff, procedures and recurring client base.

 

There is an increasing trend for smaller practices to amalgamate or merge to achieve economies of scale and cost efficiencies.  In some cases groups are forming strategic alliances and using different legal structures. 

Key Industry Statistics

According to IBISWorld, there is a wide variety of industry revenue growth rates, including:

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?

SME Performance Whitepaper

Key Drivers of Medical Services Business Valuations

A medical business valuation is driven by key factors below such as: 

  • Size and geography of market coverage

  • Level of recurring revenue

  • Low reliance on key practitioners

  • Effective management systems and integrated IT systems

  • Multi-services offerings including pathology and specialist services

EBITDA Margins range from less than 15% to 35% (for some large providers), depending on the size of the business, localtion, range of services, technology and automation.

Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 1.0x - 3.0x

  • Revenue of $10m - $20m: 2.5x - 5.0x

  • Revenue greater than $20m: 4.5x - 6.0x

Our Business Valuation Experience

Our Medical practice business valuation experience has included including business valuations for:

  • Melbourne and regional based General practice clinics ranging from 2 person practice to 5 person practice plus staff 

  • Myotherapy and physiotherapy practices

  • Optometry clinics

  • Podiatry practice in regional area

  • Laser treatment clinic

  • Medical device design and manufacture

  • Childcare centres

  • Aged care service providers