Valuing Durable Medical Equipment Providers in 2025: A Comprehensive Guide for Owners, Operators, Investors, and M&A Professionals

Will Hamilton
May 9
8 min read

Although it has slowed in recent years, the durable medical equipment (DME) or home medical equipment (HME) industry remains an active segment for M&A, driven by an aging population, the shift to home-based care, and ongoing demand for chronic disease management solutions. Strategic buyers and private equity firms are targeting DME providers with strong payer relationships, efficient logistics, and diversified product offerings. Companies that can demonstrate scale, compliance with reimbursement regulations, and recurring rental or supply revenue tend to command higher EBITDA multiples.

Whether you're preparing to sell a DME / HME business, evaluating a partnership opportunity, or seeking to benchmark financial performance, this article explores the key valuation methodologies, drivers, and risk factors that determine the value of a your business.

I. Industry Context: Why DME is in Demand

The durable medical equipment (DME) market has shown robust growth in recent years and is projected to continue expanding significantly through the next decade. Some segments face more headwinds than others, as some investors believe GLP-1 weight loss drugs may reduce demand for certain types of equipment.

Grand View Research estimates that the global DME market, valued at approximately USD $208.5 billion in 2022, will reach $331.1 billion by 2030, with a compound annual growth rate (CAGR) of 5.9% from 2023 to 2030.
Mordor Intelligence projects the market size to be $232.54 billion in 2025, growing at a CAGR of 5.44% to reach USD $303.05 billion by 2030.
Polaris Market Research anticipates the DME market will exceed $377.20 billion by 2032, with a forecasted CAGR of 6.1% during the period from 2024 to 2030.

Key Growth Drivers

Key growth drivers for the industry include the following:

Aging Population: The increasing global elderly population, expected to reach 2.1 billion by 2050, is driving demand for DME products.
Rising Prevalence of Chronic Diseases: Approximately 43% of the U.S. population suffers from one or more chronic illnesses, necessitating long-term use of DME.
Shift Towards Home Healthcare: Growing preference for home-based care is boosting demand for portable and user-friendly DME devices.
Technological Advancements: Innovations in smart technologies, IoT, AI, and telemedicine are enhancing DME product capabilities and efficiency.
Favorable Reimbursement Policies: Expanded insurance coverage and supportive government initiatives are facilitating greater access to DME.
Increasing Surgical Procedures: The rise in surgical interventions, with a 3.4% increase in total procedures in 2023, is driving demand for post-operative DME.
Focus on Preventative Healthcare: Growing emphasis on proactive health management is increasing the adoption of monitoring and diagnostic DME products.

Reimbursement Outlook

In 2025, Medicare Part B reimbursement under the DMEPOS fee schedule is expected to rise modestly in line with annual CPI‑U adjustments, roughly 2.9%, and quarterly updates have been issued throughout the year to reflect new HCPCS codes and regional payment corrections, particularly in non‑rural and former competitive bidding areas. The proposed DMEPOS Relief Act of 2025 (H.R. 2005) could further bolster rates by introducing a 75/25 blended rate in nonrural, non‑competitive bidding areas through December 2025, helping offset historic downward pressure from earlier bidding cycles.

Meanwhile, 2026 DME fee updates will likely remain flat to modest, with potential downside pressure from regulatory tightening and home health cuts, but key legislative relief and sustained MA growth offer a potentially supportive offset for well-positioned suppliers.

II. Top Reasons to Get a Valuation of Your Durable Medical Equipment Company

The following is a list of common reasons for commissioning a valuation analysis or appraisal of a DME / HME business:

1. Preparing for a Sale or Strategic Partnership

To establish a defensible asking price when marketing the business
To evaluate offers from private equity, strategic buyers, or joint venture partners
To understand how your company compares to market benchmarks

2. Internal Ownership Transition

For buy-in or buy-out of partners
To support fair and compliant equity allocation among owners
To plan for generational succession or family transfers

3. Compliance with Healthcare Regulations

To support Fair Market Value (FMV) and Commercial Reasonableness (CR) assessments required by Stark Law and Anti-Kickback Statute in deals involving ownership by other healthcare providers
To document compliance in joint ventures, especially when there is a referral relationships (hospitals, ancillary service providers, or physicians)

4. Estate & Tax Planning

For gift or estate tax reporting to the IRS (especially for closely held businesses)
To support asset protection strategies
To plan for long-term wealth transfer or charitable contributions

5. Litigation or Dispute Resolution

For divorce proceedings involving business asset division
In shareholder or partnership disputes
For economic damages assessments in legal proceedings

6. Business Planning & Strategic Growth

To establish a valuation baseline for performance benchmarking
To support capital raise, refinancing, or line-of-credit applications
To identify value drivers and areas for operational improvement

III. Valuation Approaches for DME / HME Providers

Valuation professionals typically apply three core methodologies to estimate the value of a durable medical equipment provider:

Income Approach (Discounted Cash Flow or Capitalization of Earnings)

This approach values a business based on the present value of its expected future earnings or cash flows. It’s most appropriate when a company has a stable operating history and predictable future performance.

Key assumptions include:

Normalized EBITDA or owner’s discretionary earnings
Growth rate assumptions (organic and acquisitive)
Risk-adjusted discount rate (typically 10–25% for DME / HME)
Capital expenditure needs

Pros: Based on the business’ future earning power

Cons: Sensitive to forecasting errors and discount rate subjectivity

Market Approach (Comparable Transaction Method, e.g. Market Multiples)

This method uses observed EBITDA multiples or revenue multiples from recent M&A transactions or public companies in the durable medical equipment space. Typical multiples for small to medium -sized DME / HME operators are within the range of 3x to 7x EBITDA, depending on a wide variety of factors.

This article includes more details and information about durable medical equipment multiples.

Pros: Easy to benchmark; useful in active M&A environments

Cons: Requires access to quality private market data and careful adjustment for company size, margin, geography, and a variety of other factors

Asset-Based Approach

Used only when the business is underperforming or being liquidated. The value is derived from the net assets (e.g., equipment, leasehold improvements) minus liabilities.

Pros: Useful in distressed scenarios

Cons: Intangible value of the company can be difficult to quantify under this method

IV. Key Value Drivers in Durable Medical Equipment Provider Valuation

Several specific factors can materially influence an DME / HME company's valuation multiple:

Earnings Quality

Buyers and valuation professionals place significant emphasis on normalized EBITDA and / or cash flow. Adjustments often include:

Owner compensation (if above/below market)
Non-recurring revenue or expenses
Related-party lease arrangements
Post-transaction adjustments
Out-of-period adjustments

Growth Potential

Discount rates and valuation multiples are a function of perceived risk and growth. Key considerations within the industry related to growth include the following:

Diverse and Expanding Product Lines: Offering a broad range of high-demand, reimbursable products (such as respiratory equipment, mobility aids, and diabetic supplies) enables cross-selling opportunities and reduces dependence on any one product category.
Favorable Demographics and Market Trends: An aging population and rising rates of chronic conditions (e.g., COPD, diabetes) suggest sustained long-term demand for home-based medical equipment.
Strong Referral and Payer Relationships: Established relationships with physicians, hospitals, home health agencies, and in-network contracts with major payers help drive consistent order volume and improve reimbursement predictability
Technology-Enabled Operations and Inventory Management: Use of e-prescribing, patient portals, and inventory automation streamlines order fulfillment, reduces errors, and supports scalable, multi-location operations.
Recurring Revenue from Rentals and Resupply Programs: Revenue streams from equipment rentals (e.g., CPAP, oxygen concentrators) and recurring resupply (e.g., catheters, filters) generate predictable cash flow and customer retention, critical for long-term growth and valuation.

Risk Factors

Key considerations within the industry related to risk include the following:

Diverse Payer and Referral Source Mix: A balanced portfolio of payers (commercial, Medicare, Medicaid) and multiple referral sources (hospitals, physicians, home health agencies) reduces dependency on any single channel.
Strong Compliance and Accreditation: Adherence to CMS regulations, HIPAA, and accreditation standards (e.g., ACHC, HQAA, or The Joint Commission) minimizes regulatory and audit risk.
Efficient Revenue Cycle and Documentation Processes: Accurate coding, thorough documentation, and experienced billing practices help prevent claim denials and delays, improving cash flow reliability.
Proven Inventory and Logistics Management: Effective supply chain, delivery, and equipment tracking systems reduce operational waste, ensure timely fulfillment, and support scalability.
Stable Revenue with High-Demand Product Lines: Focus on essential, recurring-use products (e.g., oxygen, CPAP, mobility aids) with consistent demand improves revenue stability and cushions against market fluctuations.

V. Current Market Trends in Durable Medical Equipment M&A

Announced durable medical equipment / home medical equipment deal volume has cratered since its 2021 peak. However, a number of large deals such as ADSG, Rotech, and currently on-the-market National Seating and Mobility provide optimism for a rebound sooner rather than later.

The universe of potential buyers for smaller tuck-ins is fairly large, and includes almost 30 publicly announced durable medical equipment platform investments since 2020.

Impact of Size on Durable Medical Equipment EBITDA Multiples

To better illustrate the impact of size on DME / HME valuations, we reviewed data from the Scope Research Healthcare M&A Valuation Database and compared the size of the acquired company in terms of EBITDA to the implied multiple from the transaction. On the low end, multiples range from 3x to 6x EBITDA, while multiples for larger, fast-growing platforms can get up into the 7x to 12x EBITDA range (depending on many different factors).

Cash Flow Multiples for Small DME Providers

There are a large number of lower market DME / HME businesses listed for sale currently, most of which are seeking an individual buyer / entrepreneur type of transaction. According to our research, small DME companies are listed for sale for between 0.6x and 1.2x revenue at the 25th and 75th percentiles, respectively, and between 2.6x and 4.4x owner cash flow. However, it's difficult to glean much useful information from companies so small where the level of owner involvement is unclear. A company making $200k per year in cash flow for an absentee owner is much different from a company making $200k per year in take-home for a full-time owner / operator.

VI. Final Thoughts: Keys to Maximizing Value

If you're a DME / HME company owner or executive planning to explore a sale or equity partnership, consider the following strategies to enhance your valuation:
- Diversify Revenue Across Payers, Products, and Referral Sources: Reduce dependence on any single source by offering a broad range of high-demand products (e.g., mobility aids, respiratory devices) and serving a mix of payers and referral partners (hospitals, home health, physicians).
- Optimize Billing and Reimbursement Processes: Invest in experienced billing staff and technology to improve claims accuracy, reduce denials, and accelerate collections, which is key to improving cash flow and demonstrating operational maturity.
- Maintain Compliance and Accreditation Standards: Ensure adherence to CMS, HIPAA, and accreditation requirements (e.g., ACHC, HQAA), which lowers regulatory risk and builds buyer confidence during due diligence.
- Implement Scalable Operations and Inventory Management: Use centralized inventory systems, supply chain controls, and integrated software to support multi-location growth and improve margins, which makes the business more attractive to strategic or private equity buyers.
- Professionalize Financials: Buyers prefer accrual-based, GAAP-compliant statements.
About HealthFMV
HealthFMV specializes in appraising healthcare businesses and services arrangements, including durable medical equipment providers.
- Business Valuation: We perform independent, third-party valuations of healthcare businesses to document regulatory, tax, and financial reporting compliance, resolve ownership disputes, and help ensure both parties to the transaction are comfortable with the financial terms.
- Transaction Advisory: We work with healthcare business owners, organization executives, providers, and their health lawyers to develop transaction structures and deal terms that further their business objectives while maintaining compliance with the complex healthcare regulatory environment.
- Services Arrangements: We prepare fair market value and commercial reasonableness opinions for a variety of healthcare services arrangements including management services, hospital-based specialty stipends, case rates and PC/TC splits, block leasing, and shared savings distributions, among others.
Contact Will Hamilton at whamilton@healthfmv.com with questions about our healthcare valuation services or to discuss your specific situation. Visit scoperesearch.co for more information about our healthcare M&A research services.