How to Value an Optometry Clinic Using Industry Multiples

When it comes to buying or selling an optometry clinic, one of the most crucial steps is determining its fair market value. Unlike public companies that are valued based on stock prices, private healthcare businesses—like optometry practices—are typically valued using multiples of financial performance metrics such as EBITDA, SDE, or revenue. Understanding these valuation multiples can help you negotiate smarter, plan more effectively, and make confident decisions.

This guide will walk you through the most commonly used valuation multiples for optometry clinics, what affects those multiples, and how you can apply them in practice.

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What Are Valuation Multiples?

Valuation multiples are ratios that compare a clinic’s financial metrics—like earnings or revenue—to its overall value. For example, if a clinic earns $200,000 in EBITDA and the industry average multiple is 5x, its estimated value might be $1,000,000. These multiples are derived from comparable transactions in the same industry and are widely used by business appraisers, brokers, and investors.

Common Valuation Multiples in the Optometry Industry

Here are the primary valuation multiples used in appraising optometry clinics:

1. EBITDA Multiple (Earnings Before Interest, Taxes, Depreciation, and Amortization)

• Typical Range: 3.5x to 6x
• Best For: Mid-sized to large clinics with stable earnings

EBITDA is often used in more sophisticated valuations because it reflects the clinic’s profitability before non-operating expenses. Higher EBITDA multiples are generally associated with clinics that have multiple revenue streams, experienced staff, and solid patient retention.

Example: If your clinic has an EBITDA of $250,000 and sells at a 5x multiple, its estimated value would be $1,250,000.

2. SDE Multiple (Seller’s Discretionary Earnings)

• Typical Range: 2x to 3.5x
• Best For: Smaller, owner-operated practices

SDE includes the owner’s salary, benefits, and discretionary expenses, making it useful when the buyer plans to replace the current owner. It reflects the clinic’s total financial benefit to a new owner-operator.

Example: A clinic with $180,000 in SDE may be valued at 2.75x SDE, resulting in a valuation of $495,000.

3. Revenue Multiple (Gross Revenue Multiple)

• Typical Range: 0.6x to 1.2x annual revenue
• Best For: Preliminary valuation or limited financial data

This method is simpler and quicker but less accurate. Revenue multiples are sometimes used in early negotiations or when financial statements aren't readily available. It's also helpful when comparing clinics of similar size and services.

Example: If your clinic has annual revenue of $800,000 and is valued at 1x revenue, it would be worth $800,000.

What Affects an Optometry Clinic’s Multiple?

Not all optometry clinics are created equal. Several factors can influence whether your practice falls at the lower or higher end of the valuation range.

1. Location

A clinic in a high-traffic urban area with a wealthy clientele may command a higher multiple than a rural clinic with limited growth prospects.

2. Revenue Stability

Recurring revenue from routine eye exams, vision insurance plans, or contact lens subscriptions signals strong financial health, which boosts the valuation.

3. Equipment and Technology

Modern diagnostic tools, EMR systems, and online booking software not only increase efficiency but also make your clinic more attractive to tech-savvy buyers.

4. Staff and Management

A stable team, particularly if associate optometrists are in place, allows a buyer to step into the business without major disruptions.

5. Growth Potential

Clinics that can expand services—such as offering medical eye care, myopia management, or opening satellite locations—tend to attract higher valuations.

Industry Trends Affecting Valuation

The optometry industry is undergoing changes that affect how clinics are valued:

• Private Equity Interest: Vision care has attracted private equity firms, especially multi-location clinics. These investors often pay a premium, driving up multiples for larger practices.
• Telehealth Integration: Clinics offering virtual consultations or remote monitoring services are gaining traction.
• Aging Population: Demand for eye care is growing, especially for age-related conditions like cataracts and glaucoma.

Realistic Multiples Based on Practice Size

How to Use Multiples in a Real Valuation

To get a ballpark estimate of your clinic’s value, you can use this simple process:

1. Gather Financials: Prepare your income statement, balance sheet, and cash flow statement.
2. Calculate Your Metric: Identify your EBITDA, SDE, or gross revenue.
3. Apply the Right Multiple: Choose a multiple based on your practice size, stability, and market conditions.
4. Adjust for Specific Factors: Consider premiums or discounts based on your clinic’s strengths or weaknesses.

Final Thoughts

Valuing an optometry clinic using industry multiples is a practical and widely accepted approach, but it’s only as accurate as the data and assumptions behind it. While revenue and earnings provide the foundation, intangibles like goodwill, brand reputation, and patient loyalty can’t be ignored.

If you’re preparing to sell your clinic, knowing your likely multiple can help you set a realistic asking price. If you’re a buyer, understanding what drives these multiples can help you identify great opportunities and avoid overpaying.

For a detailed, data-driven valuation report customized to your clinic’s specifics, consider using AI-powered business valuation software like Equitest. It streamlines the process and helps ensure that no critical factor is overlooked.

? Ready to Find Out What Your Optometry Clinic Is Worth?

Get an instant, customized valuation using Equitest's AI-powered platform. You can evaluate your clinic in just a few minutes.
If you're unable to complete it, we’ll send you the valuation report within 3 days—guaranteed.

Start Now – Fast, accurate, and risk-free.