Dental Practice Value Calculator

Dental Practice Value Calculator

Estimate the fair market value of your dental clinic based on industry standard multiples.

Estimated Practice Valuation

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This estimate uses a weighted average of the Collections Method (70%), the Net Income Multiplier (2.2x), and the Patient Base Valuation ($800/patient).

Understanding Dental Practice Valuation

Valuing a dental practice is a complex process that combines tangible assets with "goodwill"—the likelihood of patients returning to the practice after the sale. Brokers and appraisers typically look at three key metrics to determine what a buyer is willing to pay.

The Three Main Valuation Methods

1. Percentage of Annual Collections: Historically, general practices often sell for 60% to 85% of their annual gross revenue. This is a common "rule of thumb" but can vary based on the health of the local market.
2. Net Income Multiplier (EBITDA): This is the most accurate method for investors. It looks at the "Earnings Before Interest, Taxes, Depreciation, and Amortization." Typically, a dental practice will sell for 1.5x to 3x its annual net profit.
3. Value per Active Patient: Appraisers often assign a value to each active patient (someone who has visited the office in the last 18–24 months). This value usually ranges between $500 and $1,200 per patient depending on the geographic location and procedure mix.

Example Calculation

If a practice has the following stats:

• Annual Collections: $1,000,000
• Net Income: $250,000
• Active Patients: 1,500

The valuation would look like this:

• Collections Method (70%): $700,000
• EBITDA Method (2.2x): $550,000
• Patient Method ($800/ea): $1,200,000

A weighted average would suggest a value between $750,000 and $850,000, depending on equipment quality and location.

Factors That Increase Practice Value

• Modern Technology: Digital X-rays, CBCT scanners, and modern operatories increase value and decrease immediate capital expenditure for the buyer.
• High Retention Rate: A loyal patient base with a high percentage of hygiene re-appointments.
• Fee-for-Service vs. PPO: Practices with a higher percentage of fee-for-service or out-of-network patients generally command higher multiples than those heavily dependent on low-reimbursing PPO plans.
• Low Overhead: Practices that keep overhead below 60% are highly desirable and more profitable for the incoming owner.

function calculateDentalValue() { var revenue = parseFloat(document.getElementById('annualRevenue').value); var income = parseFloat(document.getElementById('netIncome').value); var patients = parseFloat(document.getElementById('activePatients').value); var equipment = parseFloat(document.getElementById('equipmentValue').value); // Validation if (isNaN(revenue) || isNaN(income) || isNaN(patients)) { alert("Please enter valid numbers for Collections, Net Income, and Patients."); return; } // Calculation Logic // Method 1: 70% of Revenue var valByRevenue = revenue * 0.70; // Method 2: 2.2x Multiplier of Net Income var valByIncome = income * 2.2; // Method 3: $800 per active patient var valByPatients = patients * 800; // Weighted Average: 40% Income, 40% Revenue, 20% Patient Count var rawValue = (valByRevenue * 0.4) + (valByIncome * 0.4) + (valByPatients * 0.2); // Adjust based on equipment (Adding a small premium if equipment is high) // If equipment value is > 15% of Revenue, add 5% to value if (equipment > (revenue * 0.15)) { rawValue = rawValue * 1.05; } // Formatting output var formattedValue = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }).format(rawValue); document.getElementById('finalValuation').innerHTML = formattedValue; document.getElementById('valuationResults').style.display = 'block'; // Smooth scroll to result document.getElementById('valuationResults').scrollIntoView({ behavior: 'smooth' }); }