EBITDA for medical practices
Earnings Before Interest, Taxes, Depreciation, and Amortization. In a clinic, EBITDA measures operating profitability before accounting and tax decisions distort the picture. It strips away financing choices and non-cash charges so you can see how much cash the operations actually generate.
Why this matters for your clinic
EBITDA is how buyers and lenders value your practice. A $5M practice with 20% EBITDA ($1M) at a 6x multiple is worth $6M. At 15% EBITDA ($750K), it is worth $4.5M. That 5% gap is a $1.5M difference in your exit price.
Most clinic owners track revenue religiously but ignore EBITDA. Revenue tells you how much money came in. EBITDA tells you how much of it you actually kept before the IRS and your lender took their share. If revenue is growing but EBITDA is flat, your expenses are eating every dollar of growth.
When you bring on a fractional CFO, one of the first things they will build is a monthly EBITDA trend. Not because it is a fancy metric, but because it is the single number that tells you whether your business is getting healthier or sicker.
How to calculate
Revenue - Operating Expenses (excluding interest, taxes, depreciation, amortization) = EBITDA
What good looks like
EBITDA margins vary by specialty. Using MGMA Cost Survey cost-of-operations data as a proxy, dental group practices frequently report 28–34% operating margins once owner compensation is normalized, physical therapy clinics typically run in the low double digits, and most other outpatient specialties land in a 15–25% band. Pitchbook healthcare services reports show transaction multiples most commonly between 5x and 8x EBITDA for sub-$10M clinic platforms.
From Sorso
In the dental clients we onboard, normalized EBITDA typically lands in the 28–34% band once owner comp is pulled out and treated as a market-rate salary.
Related terms
Founder of Sorso. 18 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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