Independent optometry practice valuations across Australia

Consultations: priced by Medicare and mostly bulk billed

Eye examinations by optometrists are funded through Group A10 of the Medicare Benefits Schedule (MBS). The standard comprehensive initial consultation is item 10910 for a patient under 65, payable once in any 36-month period, and item 10911 for a patient aged 65 or over, payable once in any 12 months. At the time of writing both carry a schedule fee of $79.80, last updated on 1 July 2026, with a Medicare benefit of 85 per cent, or $67.85. Other A10 items cover progressive disorders, diabetic eye examinations, contact lens fitting for prescribed classes of patient, computerised perimetry, children's vision, low vision and domiciliary visits, residential aged care homes included.

Optometrists have been able to set their own fees since 1 January 2015, when the Commonwealth removed the charging cap from the Common Form of Undertaking for Participating Optometrists. Where the fee exceeds the benefit, the MBS explanatory notes require the optometrist to tell the patient at the consultation. Most services are nonetheless bulk billed: the Department of Health, Disability and Ageing's statistics for 2025-26 record 11,983,889 optometry services attracting $671.5 million in benefits, with 94.1 per cent bulk billed against 76.0 per cent across all Medicare services.

Consultation revenue is therefore priced by government and moves when the schedule fee moves. Its larger economic role is to produce the prescription that leads to a dispensing sale, so a practice cannot be valued on examination income alone.

Dispensing: where the margin is earned

The MBS notes make the commercial risk explicit. A spectacle or contact lens prescription becomes the property of the patient, who may have it dispensed by anyone, and the optometrist must make sure the patient knows they are entitled to a copy. An examination leads to a sale only if the patient chooses to buy in the practice.

The measures that matter are the capture rate (the share of examinations that produce a dispensing sale), the average value of a spectacle job, the mix of single-vision, multifocal and specialty lenses, and contact lens resupply. Gross margin is tested rather than accepted. Reported cost of goods is reconciled to supplier statements and a stock count, laboratory charges are matched to the jobs they relate to, and supplier or buying group rebates are allocated to the period that earned them and checked for whether a new owner would receive them. Discontinued and slow-moving frames are written down, and consignment stock is excluded because the practice does not own it.

Stock is also the main item of working capital, the short-term funding a business needs to trade. Here it is frame, lens and contact lens stock plus amounts due from insurers, less creditors and deposits taken on spectacles still in the laboratory. Those deposits are a liability the buyer inherits, because the buyer must deliver the glasses.

Private health insurance and preferred providers

Glasses and contact lenses are among the services general treatment (extras) cover may include, and the Australian Government's privatehealth.gov.au notes that nearly all such services are covered only to a limited extent, with limits that may apply per service, per year or for a lifetime. APRA reports that 55.5 per cent of the population held some general treatment cover at 30 June 2026, and that insurers paid $229.59 million in optical benefits across 2,726,057 services in the June 2026 quarter, an average of $84 a service.

Optical claims are seasonal. APRA's figures show optical services rising 52.7 per cent from the September quarter to 3,910,744 in the December 2025 quarter. A valuer therefore works from a full year of trading and looks at how sales fall around the valuation date before reading anything into a part-year result.

Insurers also run preferred provider arrangements. In a 2015 letter to Treasury, Optometry Australia said it was concerned that some of these arrangements encourage policyholders to attend preferred providers for higher optical rebates, and restrict some providers from taking part solely on the basis of their business footprint. Whether the practice sits inside the networks its patients' insurers use, and whether any agreement would survive a sale, bears on the earnings a buyer can rely on.

Veterans and state spectacle schemes

Veteran Card holders with an assessed clinical need may see an optometrist registered through Services Australia as a DVA provider once every three years if under 65, or every year from 65, and DVA can pay for either one pair of multifocal glasses or one reading and one distance pair every two years. A practice that dispenses to veterans must register with DVA as an optical dispenser, display at least 20 appropriate frames and supply them at the prices in DVA's visual aids schedule, with the veteran paying any difference for items outside that range.

State schemes work in a similar way for eligible people. The NSW Spectacles Program supplies glasses and other vision aids through a network of approved participating optometrists and optical dispensers. The Victorian Eyecare Service, funded by the Victorian Department of Health and administered by the Australian College of Optometry, works in partnership with private practice optometrists in rural and regional Victoria. Queensland's Spectacle Supply Scheme provides a pair of basic prescription spectacles once every two years to permanent Queensland residents who have held a Pensioner Concession Card, Health Care Card or Queensland Seniors Card for at least six months, on an application completed with an optometrist after an eye examination. Scheme work is priced by the scheme and depends on the practice continuing to take part, so the valuer identifies its revenue and margin separately.

Registration, endorsement and what does not transfer

Registration under the Health Practitioner Regulation National Law attaches to the optometrist, not the practice. Endorsement for scheduled medicines under section 94 of the National Law qualifies an optometrist to prescribe or supply scheduled medicines, and it too belongs to the individual optometrist.

A principal without the endorsement may run a narrower clinical practice than an endorsed optometrist a buyer would employ. The valuation reflects the practice as it operates, but that gap can affect how many buyers are interested.

Little of this regulatory layer passes with a sale. A Medicare provider number is needed for every location from which a practitioner delivers services, optometrists accredited to prescribe under state or territory legislation can apply for approval as PBS prescribers, and DVA and state scheme registrations need to be confirmed for the new owner.

Maintainable earnings after an optometrist's wage

Maintainable earnings are the profit the practice can be expected to repeat in a normal year under a new owner. Normalisation is the process of getting there: removing one-off items, resetting related-party arrangements to market and charging costs the current owner does not bear. The result is usually expressed as EBITDA (earnings before interest, tax, depreciation and amortisation) or EBIT (earnings after depreciation but before interest and tax).

The largest adjustment is usually the principal's own time in the consulting room. An owner who examines most of the patients is rewarded twice through the same accounts, once for clinical work and once as owner, and only the owner's return is for sale. The analysis charges a market salary for the examination sessions the principal actually works, using appointment and Medicare claiming data, plus a management wage for supervising dispensing staff, ordering stock and running the practice. See maintainable earnings.

The recall base as transferable goodwill

Goodwill is the amount a buyer pays above the value of the identifiable net assets. Personal goodwill attaches to an individual optometrist; transferable (commercial) goodwill stays with the practice when that person leaves. In optometry the recall base is the main source of transferable goodwill: patients the Medicare intervals and their clinical condition bring back, recorded in a practice management system the buyer will own.

The base is measured, not assumed. The valuer looks at active patients seen within the relevant recall period, recall response rates, the share of examinations from returning patients, and whether records hold enough clinical detail for another optometrist to continue care. The MBS notes require any notice suggesting re-examination to be sent solely on the basis of the patient's clinical needs, so a recall program run as a sales campaign is a compliance exposure as well as weaker evidence of goodwill. Where patients book to see one named optometrist, key-person risk (the exposure of earnings to the loss of one individual) is high. See practitioner dependence and transferable goodwill.

Imaging equipment and its replacement cycle

Diagnostic imaging has a shorter life than most of the consulting room. The ATO's current effective life determination lists glaucoma diagnostic assets, including optical coherence tomographs (OCT), at five years, digital cameras (retinal cameras included) at four years, refraction units at ten years and mounted slit lamps at twelve years. These are tax lives rather than a forecast, but they explain why maintainable earnings need an allowance for replacing imaging, or why EBIT, which carries depreciation, is often the better base.

The MBS notes state that the computerised perimetry items are not intended to be claimed for screening or for OCT. Where the practice charges separately for scans, the valuer tests whether that private fee would hold under a new owner. Equipment is taken at depreciated replacement value, and anything under finance or rental is treated as debt.

Networks, contractors and payroll tax

Independent practices compete with corporate retail chains, franchise networks and joint venture models in which an optometrist holds equity alongside a corporate partner, and many independents belong to buying groups. The same networks can also be buyers. A network may value the location and patient list for conversion to its own model, which is a buyer-specific view; market value asks what the practice is worth to the pool of likely buyers. Groups also face a Medicare rule: the referred consultation item 10905 requires that no commercial arrangement or connection exist between the referring and the treating optometrist.

Payroll tax matters where optometrists are engaged through their own companies or trusts. Queensland Revenue Office Public Ruling PTAQ000.6.5, issued on 3 March 2025, summarises The Optical Superstore case, in which the Victorian Civil and Administrative Tribunal found contracts between an optical retailer and optometrists or their entities to be relevant contracts, noting that the arrangement could lead to more sales of frames and lenses. The retailer did not challenge that finding on appeal, and the Victorian Court of Appeal upheld the Commissioner's assessments. An unassessed exposure reduces maintainable earnings and may be a liability a buyer prices or excludes; whether it applies turns on the facts and is a question for the practice's tax adviser. See payroll tax and contractor arrangements.

Advertising and premises

The National Law's advertising provisions bind anyone who advertises a regulated health service, including owners who are not registered practitioners, and an advertisement offering a gift, discount or other inducement must state the terms and conditions of the offer. That reaches package pricing and second-pair offers. A shopping centre lease with relocation or demolition clauses, or little remaining term, puts both walk-in trade and the recall base at risk. See premises and lease terms.