The Role of EBITDA in an Optometry Practice Sale

The term “EBITDA” is commonly used across almost every type of business and optometry is no exception. If you own an optometry practice then you have almost certainly heard the word EBITDA more times than you can count. It comes up in valuation conversations, growth planning and nearly every discussion about selling an optometry practice. Sometimes it is mentioned casually by an advisor and other times it is positioned as the single number that defines the value of everything you have built.

What we see again and again is that owners know EBITDA matters but many are not fully sure why it matters or what it is actually telling them about their optometry practice. Most optometry owners are busy running clinics, managing staff and taking care of patients which leaves very little time to step back and really look at what the numbers are quietly signaling.

During one of our recent webinars, Dr. Tom asked a question that immediately changed the direction of the conversation. He said, “Everyone keeps telling me my EBITDA needs to be stronger but what does that actually mean in real life?” Within seconds all hands went up across the call. There were practice owners from across the United States and Canada and all were running very different optometry practices but yet asking the same question.

That moment is one of the main reasons we wanted to spend time on this topic. The confusion around EBITDA is not because owners are missing something or doing something wrong. It exists because EBITDA reflects the business beneath the clinical work and most optometrists were never taught to look at their practice that way.

EBITDA is not just a formula or a line on a spreadsheet. It is what someone sees when they look at your practice from the outside and are not emotionally tied to it the way you are. It tells a story about efficiency, stability and risk and in optometry that story can change based on small operational decisions that rarely feel urgent when patient care is the priority.

At DVMelite, we talk about EBITDA not because every owner is ready to sell. We do it because once owners really understand it they start seeing their practice differently long before selling is even on the table.

What EBITDA Really Shows in an Optometry Practice

EBITDA stands for earnings before interest, taxes, depreciation and amortization. Most optometry owners have heard that definition and most would also say it never helped them make a better decision inside their practice.

In simple terms, EBITDA shows how much money your practice makes from just running the business before personal pay decisions, loans or taxes. 

When buyers look at EBITDA they are not judging how hard you work or how long your days are. They are asking one practical question. If this practice keeps running exactly the way it does today and how reliable is it?

That question has very little to do with how busy your schedule feels and everything to do with whether the practice produces consistent and predictable results. This is usually the point where owners pause for a moment because they realize they may have been measuring the wrong things for years without knowing it.

Why Buyers Care More About EBITDA Than Revenue

Many optometry owners focus on revenue because a full schedule, long exam days and strong collections make the practice feel successful.

Buyers see those same numbers very differently.

Two practices can collect the same revenue and still sell for very different prices. We see this all the time. One practice is valuable because staffing is stable, systems are clear and costs are controlled. The other struggles because expenses slowly increased over time and the owner made up the difference by working harder.

Revenue shows how busy a practice is. EBITDA shows how strong it really is.From a buyer’s point of view, EBITDA answers questions revenue cannot.

• Can the practice support acquisition debt? 

• Will staff stay after the sale?

• Can it grow without creating stress? 

• Can it run without the owner making every decision in real time?

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A practice can look busy and still be fragile. EBITDA is what exposes that difference.

A few months ago, we were speaking with one of the buyers who regularly acquires optometry practices across different markets. During that conversation, he mentioned that this exact situation comes up again and again. Practices often appear strong because revenue is high but once he looks deeper at EBITDA, he sees how much pressure the owner has been absorbing just to keep things running.

He explained that many practices look identical on paper at first glance yet one feels stable while the other feels risky. The difference is rarely patient demand. It is usually how the business is structured and whether the practice can operate smoothly without the owner constantly stepping in. That is why buyers spend so much time on EBITDA. It helps them understand not just how busy a practice is today but how sustainable it will be after the ownership transition.

How EBITDA Is Actually Calculated in Optometry

This is often where owners feel the most uncertainty. EBITDA is not simply what remains at the end of the year. It is calculated after adjustments that help buyers understand how the business performs without personal distortion.

In optometry, this usually includes normalizing owner compensation, removing one time or non recurring expense and then adding back personal or discretionary costs and adjusting expenses that would not continue under new ownership.

For example, if you pay yourself well above market because you built the practice from scratch, EBITDA is adjusted downward to reflect what a replacement optometrist would earn. If you pay yourself very little to keep cash in the business, EBITDA is adjusted upward. If travel, family benefits or personal expenses run through the practice, those amounts are added back.

This process is not about inflating value. It is about clarity. Many owners are surprised when they see adjusted EBITDA for the first time. Some realize their practice is stronger than they thought, while others clearly see where value has been quietly leaking.

Why EBITDA Slowly Erodes in Many Optometry Practices

EBITDA erosion in optometry is rarely dramatic.

Staffing costs rise gradually. Inventory becomes inefficient. Vendor contracts renew without review. Recall systems weaken. The owner fills gaps personally because patient care always comes first.

None of these issues feel urgent on their own. Together, they quietly reduce profitability year after year. This does not mean the practice is failing. It usually means the business side was never intentionally optimized.

Owner Dependence, Staffing, and Optical Performance

Buyers pay close attention to owner dependence. When every decision flows through the owner, EBITDA tends to suffer. Growth slows, transitions feel risky, and the practice becomes harder to scale.

Practices with clear systems, trained staff, and shared responsibility tend to show stronger EBITDA. Associate driven production also reduces fragility because revenue does not hinge on one person.

Staffing efficiency and optical performance play a major role here. Strong teams improve patient flow, protect recall, and support optical conversion. Weak systems lead to turnover, overtime, and margin loss.

Buyers do not expect perfection. They look for consistency and structure.

How EBITDA Shapes Valuation and Timing

In optometry practice sales, EBITDA is typically multiplied by a market driven multiple to estimate value.

Practices with stable EBITDA and low owner dependence receive stronger multiples because buyers feel confident. This is why two practices that appear similar on the surface can sell for very different prices.

EBITDA shapes confidence and confidence drives value.

Final Thoughts

EBITDA matters because it shows how your practice truly operates today.It reveals how efficient the business is, how dependent it is on you and how prepared it is for growth or transition. Understanding EBITDA does not mean you are selling. It just means you finally know where you stand.

At DVMelite, our role is not to push owners toward exits. It is to help practice owners understand what their numbers are saying beneath the surface and where small operational changes can protect years of hard work.

If you have ever asked the same question Dr. Tom raised during that webinar, you are not behind. You are exactly where most thoughtful owners eventually arrive. Often, a simple conversation brings more clarity than another spreadsheet ever could.

If you would like to understand what your EBITDA is really telling you and how it may impact the value of your optometry practice, you can start with a simple conversation by filling out the form below.