Buying a Home Care Business and What It Costs to Buy a Home Care Agency

An existing US home care business cost a median $700,000 to buy across 2021 to 2025, based on closed BizBuySell sales of home health care businesses, on median revenue of $1,300,000 and median owner earnings of $263,436. Financed with an SBA 7(a) loan at 10 percent down, the cash you bring to that purchase is about $84,175 for the equity injection and the SBA guaranty fee, plus working capital for payroll. Unlike most small businesses, the median agency's earnings support more debt than the price needs, so the loan is rarely what stops the deal. The diligence is.

Most pages that answer this question price starting an agency: a state license, a policy manual, insurance, an office and months of recruiting before the first client. Buying a home care agency is a different purchase. You pay for clients already receiving care, caregivers already on the schedule, payer contracts already in place and referral sources that already send work. The price is set by earnings. Whether it is a good buy is set by whether those hours, caregivers and contracts stay after you take over.

How much does it cost to buy a home care business?

The median home care business sold for $700,000, which is 2.66 times its $263,436 of seller discretionary earnings and 0.54 times its revenue. The published median multiple is 3.00x earnings, and half of all sales landed between 2.22x and 3.63x. Those readings differ because the median price, the median earnings and the median multiple come from different agencies; $263,436 at 3.00x gives $790,308, 12.9 percent above what the middle agency actually sold for.

Seller discretionary earnings (SDE) is net profit plus the owner's pay, benefits, interest, depreciation and one-time costs, the cash one full-time owner takes out. In home care, two adjustments matter most: work the owner does that a buyer must replace (covering shifts, the after-hours phone, recruiting) and payroll that does not match the hours billed, such as caregivers paid as contractors when they should be employees. Read the price off the earnings of the agency in front of you:

Which column applies depends mostly on size. BizBuySell states that a home health care business consistently generating sales over $2 million annually may sell for an earnings multiple of 3.5 or higher, while a smaller one with sales below $800,000 may sell closer to 2. The full distribution, the year by year prices, the financing ladder and the comparison with assisted living, medical and dental practices are on our home care business valuation page. If the seller has handed you a profit and loss statement rather than an SDE figure, start with how to calculate SDE.

How much money do you need to buy a home care agency?

On a $700,000 agency financed with an SBA 7(a) loan, plan on about $84,175 at closing for the 10 percent injection and the guaranty fee, before working capital, licensing, legal costs and the valuation the lender orders. Here is the arithmetic at three sizes of agency, each priced at the median 3.00x except the middle column, which is the actual median sale, at 10.5 percent on a 10 year business loan.

The small and large columns are illustrations built from the quartiles of owner earnings, not real agencies. Read the last row against the salary you need. On the median agency you can pay yourself up to $135,924 and still pass the lender's coverage test, which is a lot of room by small business standards. On the small agency the cap is $63,569, which is roughly what it costs to hire an office manager, so a small agency is really a job you buy.

Working capital is where first-time home care buyers get caught. Caregivers are paid every week or two from the first day, while Medicaid programs, the VA and long-term care insurers often take weeks to pay, and a new provider number or payer enrollment can delay the first payments further. Agree in the purchase agreement whether receivables stay with the seller, how much cash is left in the business at closing, and keep several payrolls in the bank on top of the cash to close.

Can you get an SBA loan to buy a home care business?

Yes. Home care agencies are eligible for SBA 7(a) loans, and on a 10 year loan at 10.5 percent the median $263,436 of earnings supports about $1,007,005 at an $80,000 owner draw, 43.9 percent above the median $700,000 sale. Three parts of SBA SOP 50 10 8.1, effective October 1, 2026, still shape the deal.

First, the term. A change of ownership loan may not amortize over more than 10 years, except for real estate. Home care agencies rarely own their office, so nearly every buyer is on the 10 year math above.

Second, the valuation. The lender may do its own valuation only when the purchase price is $350,000 or less and you are not closely related to the seller. The median $700,000 agency is above that line, so the lender orders an independent business valuation, and anything you agree to pay above the value it supports has to come from your equity or a seller note, not the loan.

Third, the equity. The SBA expects a 10 percent injection on a complete change of ownership. A seller note can count toward part of it only on the terms the SOP allows, usually on full standby, so ask the lender how it treats one before you build it into your offer. In home care, a seller note or an earnout tied to retained hours is also the cleanest way to share the handover risk.

Do you need a license to buy a home care agency?

You need the agency to hold a valid license under your ownership, and in many states a change of ownership means a new application or a formal notice and review. Licensing for non-medical home care and skilled home health is set state by state, so call the state agency that licenses home care before you sign a letter of intent and make the approval a condition of closing.

Medicare-certified home health agencies add a federal rule that changes the price. Under 42 CFR 424.550(b), if majority ownership changes within 36 months after the agency's initial Medicare enrollment or its most recent majority ownership change, the provider agreement and Medicare billing privileges do not convey to the new owner. You would enroll as a new provider and go through a state survey or accreditation first. Exceptions include an agency that has filed two consecutive years of full cost reports. Ask for the enrollment date and the ownership history before you discuss price.

Is buying a home care business a good investment?

For an owner-operator it is one of the better financed purchases in small business, and unusually, it can also work for a semi-absent owner who hires an administrator. The median owner margin is 20.3 percent, the thinnest of the seven health and medical categories BizBuySell compares, and it dipped to 17.1 percent in 2024 before recovering to 20.2 percent in 2025. Margin is mostly caregiver pay, overtime and how many authorized hours actually get staffed.

Hire an administrator at the BLS median wage for medical and health services managers, $123,860 a year in May 2025, plus payroll tax, and the median agency's earnings fall to $130,101. The $700,000 price becomes 5.38 times earnings, and with no owner draw those earnings still support about $714,211 of SBA debt, just above the price. That only holds if the administrator and the scheduler stay, so their pay and any retention bonus belong in your offer, not after it.

Prices have also come down. The median sale fell from $912,500 in 2021 to $667,000 in 2025, down 26.9 percent, while median owner earnings fell 16.6 percent, so most of the drop is smaller agencies coming to market rather than cheaper multiples.

What to check before you make an offer

• Billed hours by client, payer and month for three years. Revenue is hours times rate. Look for clients who left, the share of hours from the top ten clients, and the gap between authorized and staffed hours.
• The payer mix and rates. Revenue by payer (private pay, Medicaid waiver, VA, long-term care insurance, Medicare), the rate per hour from each, any audits or recoupments, and the age of receivables by payer.
• Caregivers, pay and turnover. The roster with hire dates, pay rates and weekly hours, turnover by month, and how overtime is handled. Federal overtime rules for agency-employed home care workers have been in flux since a July 2025 Department of Labor proposal, and New York, New Jersey and California require overtime under state law in any case. If replacing departures is a constant job, budget for it and look at tools that source and screen caregiver applicants before you take over, because unstaffed hours are lost revenue.
• Worker classification. Caregivers paid as 1099 contractors while the agency sets their schedules and clients are a payroll tax and wage claim risk that stays with the business. Ask how every caregiver is paid.
• Visit records and compliance. Medicaid personal care and home health services require electronic visit verification under the 21st Century Cures Act. Check that visit records match billing, and pull the last state surveys and any complaint investigations yourself.
• Referral sources. Which hospitals, case managers and senior living communities send clients, how many each sent last year, and whether those relationships belong to the agency or to the seller personally.
• The transition. How long the seller stays, who tells clients and caregivers, and which office staff have agreed to stay. In home care the scheduler often knows more about the business than the owner does.

How do you know if the asking price is fair?

Divide the asking price by the normalized owner earnings and compare it with the sold range: about 2.22x at the lower quartile, 3.00x at the median and 3.63x at the upper quartile. A $900,000 asking price on $250,000 of earnings is 3.6x, which needs an agency near $2 million of revenue with a manager in place to hold up. On an agency billing $900,000 where the owner runs everything, it is too high, and the lender's valuation is likely to say so.

Listing data looks different here than in most sectors. Agencies on the market now report median owner earnings of $229,684, 12.8 percent below the agencies that sold, and ask a median 2.75x against 3.00x paid. The agencies that sold closed at an average 0.92 of their asking price, after a median 175 days on the market, so expect to negotiate about 8 percent off a typical ask.

Before you pay for a formal appraisal or sign a letter of intent, run the agency's revenue and owner earnings through the estimator on our home care business valuation page. It returns a value range against what home care businesses actually sold for and shows how much of it an SBA loan will cover. For the loan itself, our guide to using an SBA loan to buy a business walks through the application, and business valuation cost shows what the lender's report will cost you. If you are also comparing a staffing agency, the hours-and-payroll diligence is much the same.