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Explore your assumptions
Use your own figures. There are no prefilled market rates or valuation multiples.
Complete the inputs to see your scenario.
—The result updates as you change the values.
Calculations stay in your browser. Inputs are not submitted or saved. This tool provides arithmetic, not a valuation, loan quote, clinical staffing plan, or approval.
Key takeaways
- Gross margin uses revenue after direct service cost and before overhead.
- Loaded hourly cost should reflect the direct labor burden appropriate to your calculation.
- The amount remaining after entered overhead still excludes any costs you have not included.
Understand the calculation
Revenue = monthly collected service hours × collected revenue per hour. Direct cost is the same hours multiplied by loaded direct cost per hour. Gross profit is revenue minus direct cost, and gross margin is gross profit divided by revenue. The tool then subtracts entered monthly overhead.
Match the time periods and definitions
Use a consistent period. Cash collected in one month may relate to earlier services. If you are analyzing accrual results, build a separate reconciliation and label it accordingly rather than mixing billed revenue with unrelated hours.
Review verification, authorization, and billing records for affected Medicaid services. A verified visit does not by itself establish payment, but the records can help reconcile the activity. (Source: Medicaid.gov, 2026)
| Component | Examples to consider |
|---|---|
| Direct labor cost | Pay, employer payroll burden, applicable overtime and benefits |
| Other direct costs | Service-related cost allocated consistently to hours |
| Overhead | Scheduling, recruiting, office, insurance and administration as defined |
| Excluded cash obligations | Debt, taxes, investment and costs not entered |
An illustrative example
Using arbitrary demonstration inputs of 1,000 hours, $40 collected per hour, $28 loaded cost, and $9,000 overhead produces $40,000 revenue, $12,000 gross profit, 30% gross margin, and $3,000 after entered overhead. These are not market rates or a statement about typical agency profitability.
Why a wage statistic is not the cost input
BLS occupational wages describe compensation in a defined data series. They do not automatically include an agency's employer burden, overtime pattern, travel, recruiting, or administration. Use the business's records to calculate the appropriate loaded cost. (Source: BLS, 2026)
What assumptions deserve stress testing?
Try fewer collected hours, a lower collected bill rate, or a higher direct cost. Then consider whether overhead changes with activity. The model is linear and does not automatically add a scheduler, minimum shift, or recruitment step cost. Those operational changes must be reflected in the inputs or a fuller forecast.
Use the result to ask better questions
A buyer can ask which hours earn a sustainable contribution and which responsibilities the owner is absorbing. A seller can identify the records needed to explain margin. Neither should present this simple output as a valuation or a promise of future income.
Terms to use in your review
The bill rate is a service charge, while gross margin depends on which direct costs the calculation includes. Keep those definitions consistent when entering assumptions.
Connect the operating evidence
Use the payer-mix guide to build consistent revenue and cost inputs. Authorized hours do not establish delivered or billable activity, so reconcile service volume before relying on a margin scenario.
Frequently asked questions
What is loaded direct hourly cost?
For this tool, it is the total direct service cost you allocate to each collected hour, including the relevant payroll burden and other direct costs. Define the components consistently.
Why use collected revenue per hour?
It connects the scenario to cash actually collected for service. Billed amounts, authorizations, and scheduled hours can differ. Use a consistent period and account for timing effects.
Is the result EBITDA?
No. It is a simple contribution calculation using your entered cost categories. It does not establish an accounting earnings measure or include every expense automatically.
Can the margin be negative?
Yes. If loaded direct cost exceeds the collected bill rate, the model shows a negative gross margin. That is a useful signal to inspect the inputs and operation.
Sources
Sources are dated to distinguish current guidance from earlier publications. They support the identified facts; the transaction questions and examples are educational analysis.
- BLS: home health and personal care aides (2026). Retrieved September 5, 2026.
- Medicaid.gov: Electronic Visit Verification (2026). Retrieved September 5, 2026.