Adding up the Pieces of Your Practice’s Financial Puzzle

Annelies Calnan is the Director of Practice Transitions at Cleinman Performance Partners, a consulting firm that specializes in supporting optometry practices with business growth, ownership transitions, and strategic decision-making. As a CPA with over eight years of experience in healthcare transactions — primarily within optometry — Annelies guides clients through financial analysis, valuations, and deal negotiations, helping practice owners confidently navigate milestones from hiring associates to executing complex exits.

Here’s a glimpse of what you’ll learn:

[03:11] Annelies Calnan explains EBITDA and why it matters in practice transitions
[05:44] Why chasing gross revenue can create profitability blind spots
[08:23] Common add-backs that reveal a practice’s true operational profit
[10:24] What a healthy EBITDA margin may look like for an optometry practice
[15:03] The common debts found on optometry practice balance sheets
[18:47] How to stop fearing your numbers and start understanding your business

In this episode…

Some practices seem profitable on the surface, yet struggle when it comes to producing cash flow. Deciphering the numbers that grow profitability in your practice can feel overwhelming at first — so how should you begin?

The first step, according to Annelies Calnan, a CPA with extensive experience in healthcare transactions, is to look beyond gross revenue. She explains that EBITDA — earnings before interest, taxes, depreciation, and amortization — shows the operational profit a practice generates if a third party were running it. By removing owner-specific expenses and one-time costs, this metric reveals the true efficiency and financial health of a practice, helping owners make smarter, more informed decisions.

In this episode of the Cleinman Connect Podcast, Kim Carson is joined by Annelies Calnan, Director of Practice Transitions at Cleinman Performance Partners, to discuss decoding practice profitability. Annelies explores how EBITDA offers a clearer picture than revenue alone, why balance sheets matter, and common financial blind spots. She also shares tips on preparing to understand your own numbers and confidently manage your practice’s growth.

Resources mentioned in this episode:

Quotable Moments:

“It’s pretty much the operational profit — profit if a third party was operating the business.”
“So the normal adjustments are, again, it’s to get to how we would run under a third party.”
“I always say you can’t look at one piece; there are two sides of the same coin.”
“The numbers aren’t scary. I know that sometimes it’s uncomfortable to go into something you don’t know.”
“Just consistently looking at those numbers and seeing where, what those margins are, eventually they will talk.”

Action Steps:

Track EBITDA consistently: Monitoring operational profit regularly helps owners understand true practice performance beyond gross revenue.
Review balance sheets alongside income statements: Examining assets, liabilities, and debt ensures a complete view of financial health.
Normalize owner compensation and one-time expenses: Adjusting for these factors reveals the practice’s profitability under third-party operation.
Analyze staffing and operational costs: Evaluating team efficiency prevents overstaffing and ensures revenue growth translates to real profit.
Engage with financial advisors for strategic assessments: Professional guidance uncovers blind spots and informs smarter, sustainable business decisions.

Sponsor for this episode…

This episode is brought to you by Marketing4ECPs.

Working with them is like hiring a full-time marketing professional who knows the industry and understands your goals. Except, instead of one experienced marketer, you get a whole team in your corner.

Whether you’re an optometrist, ophthalmologist, or optician, they can help you grow your business with a plan that’s completely customized for you. Learn more here.

Powered by Rise25 Podcast Production Company

Episode Transcript

Intro: 00:07

Welcome to the Cleinman Connect Podcast, where we discuss marketing, ownership, growth strategies and everything else surrounding the business of optometry. Cleinman is Optometry’s trusted business partner for over 35 years.

Kim Carson: 00:28

Hello, I’m Kim Carson, host of the podcast. And today I have with me Annelies Calnan, Director of Practice Transitions here at Cleinman. You can get all of our past episodes, including our special feature of Optometrist Unleashed with Dr. Trevor Miranda over at Cleinman.com and wherever you like to listen.

This episode is brought to you by Marketing4ECPs. Working with them is like hiring a full time marketing professional who knows the industry and understands your goals. Except instead of one experienced marketer, you get a whole team in your corner, whether you’re an optometrist or ophthalmologist or optician, they can help you grow your business with a plan that is completely customized for you. Learn more at marketing4ecps.com.

I’m joined today by Annelies Calnan, Director of Practice Transitions here at Cleinman. Annelies is a CPA with over eight years of experience in healthcare transactions, primarily within the optometry industry. She partners with clients throughout the full transaction life cycle, from financial analysis and analysis and valuation to employment and purchase agreements. Together with her team, she delivers customized practice, transition consulting and analytical services, equipping partners to confidently navigate milestones ranging from hiring a new associate to executing complex, large scale exits. Thank you for joining me today, Annelies.

Annelies Calnan: 01:54

Thanks for having me.

Kim Carson: 01:57

So you are the Director of Practice Transitions at Cleinman. What all does that entail?

Annelies Calnan: 02:02

Thanks for having me. Our group helps clients with anything that involves financial analysis analysis to inform those strategic decisions. So that can be associate agreements, operating or partnership agreements, succession planning, acquisition or divestitures and strategic assessments.

Kim Carson: 02:20

Amazing. Yeah. I feel like when we just did our website, even having the header of like transition services felt not broad enough because of all the things that your department actually covers. So, and when I hear transition services, at least I think buying, selling or succession planning. But yeah, the partnership agreements, operating agreements, associate agreements, those are also a big part of what you do.

Yeah.

Annelies Calnan: 02:45

It’s kind of transition in how the business is run rather than transitioning the business, right.

Kim Carson: 02:50

Instead of transitioning someone in or out.

Annelies Calnan: 02:52

Yeah, exactly.

Kim Carson: 02:54

And by someone, I mean the person who calls you. So we have like a pretty Focused topic today and that is EBITDA. So could you explain what EBITDA is and why we use it as a metric here at Cleinman?

Annelies Calnan: 03:11

Yeah, absolutely. So EBITDA is for anyone who doesn’t know earnings before interest taxes, depreciation and amortization. So the main use for EBITDA is its comparability. So you use it in transactions because it removes all of the pieces that the future buyer might not take on. So the debt piece you don’t want that interest in there.

They aren’t going to be taking on your debt. And they will structure it differently. So they can that can be wiped taxes. They might structure it differently, pull that out. Depreciation, depreciation and amortization are both non-cash expenses.

So those also get pulled out. So you use it largely, you know, in trends in transactions. But you also use it for comparability between entities. And so you can then use that number to compare it to similar size or different sized entities. To have a better idea of where your practice is sitting.

Kim Carson: 04:07

Okay, so kind of like a benchmark.

Annelies Calnan: 04:09

Yeah, it can be used as a benchmark. It just looks at the profitability of the practice when you adjust out a variety of different expenses.

Kim Carson: 04:17

Okay. And how does knowing this number, this acronym, this margin, how does that help any of the odds? Maybe listening.

Annelies Calnan: 04:29

So it helps knowing it helps the body to know that their practice is operating efficiently and effectively. So it’s kind of a focus on the less on the top line and more on that bottom line profitability without some of that noise of structural impacts of the debt and the taxes.

Kim Carson: 04:45

Okay. I feel like I’m already understanding it a bit more.

Annelies Calnan: 04:49

That’s the hope.

Kim Carson: 04:51

When we were talking about it, I was like, I fear that I might not know anything.

Annelies Calnan: 04:56

Yeah. The those acronyms really get some people. Yeah.

Kim Carson: 05:00

I mean, I guess that that is why your role is so all encompassing here at Cleinman is because we don’t necessarily expect anyone who enlists the transition services to know the details of this. No, you have to.

Annelies Calnan: 05:14

Yeah, absolutely. No, it’s that’s my role is making sense of the numbers when might not be exactly what everyone else has been trained on.

Kim Carson: 05:24

Yeah, I want to say like making sense of the nonsense. But yeah, perhaps I shouldn’t call finances nonsense. So why do you think that so many ODS fall into the trap of looking only at gross revenue? And what kind of, like, blind spots would that create for them as opposed to looking at this metric?

Annelies Calnan: 05:44

Yeah, I think a lot of ODS look at that gross revenue because it’s an easier number to understand. And it also they have impact on that gross revenue number. So they work more. You’re going to generate more revenue. And you can see that kind of the fruits of your labor coming out in that.

But it does create some blind spots because it doesn’t take into account any of the costs that are related to those that growth in revenue. If you increase your revenue by $100,000 by adding two opticians, where both of them are paid $40,000 a year each, you’re losing money. So you need to take into account all of those factors when looking at making those strategic decisions to kind of add individuals or growing that revenue, growing the revenue is only one piece of the puzzle to get to that profitability number. And that’s ultimately what cash your business is generating.

Kim Carson: 06:40

Okay. So what would be the best way? And I know that we had a literal definition of EBITDA already, but to just make it really fully make sense, what would be your best way to define EBITDA without any, maybe like accounting, like if you could really simplify it down for us. Yeah, absolutely.

Annelies Calnan: 07:04

So it’s pretty much the operational profit. Profit if a third party was operating the business. So you’re moving out anything that an owner might put through the business just to get it to where if a third party was running it, how would this business look and what would be the profitability of the business with that third party running it? So you’re taking out, you know, that debt and that taxes, because a third party might be operating it differently at a different level of leverage. You might be, you know, structuring it differently for tax purposes, have a different corporate structure, one time expenses.

And that might not be that day to day piece of expenses. And, you know, bringing that market rate pay for owners into or bringing the market the rate to a market rate.

Kim Carson: 07:57

I see. Okay. Thank you. I feel like I could probably ask you this question ten more times. And just, you know, watch you struggle to come up with different ways to be like, Kim, why don’t you get this?

Yeah. What are some common like add backs or adjustments that a buyer needs to make? Yeah. Or sorry, it needs to make to uncover the practice’s actual operational profitability.

Annelies Calnan: 08:23

So the normal adjustments are again, it’s to get to how we would run under a third party. So if there are owner expenses. So if there’s a car expense, auto expenses, travel cell phones, any pieces that a third party would not pay for for a normal associate, odd. That’s not going to be run through the business. And those we would adjust out if there are any non-recurring expenses.

So let’s say you built a new website. A lot of these one time expenses probably should be hitting the balance sheet instead of the income statement, but we see them on the income statement. So we’ll move those out. Or if there was a one time kind of brought in an employee. They were overstaffed then and you might readjust that.

Out. And they’ve since left the business. You know, those one time expenses that might occur. And then we also adjust for any expenses that are outside of market. So if there’s an owned property and you’re paying yourself rent, you might be above or below market.

You’re not going to either charge a third party above market or they won’t accept that, or you won’t accept below market rent for that. So we adjust that to the market rent to have it, as you know, a normalized rental expense also for owner compensation. So we would normalize an odd compensation to the market rate to show what the business would look like if you were working for a third party. So sometimes owners are overcompensating themselves, sometimes they’re under compensating themselves. So they wouldn’t be doing that if they weren’t pulling that cash out at the end of the day from the prophet.

So we’re going to normalize that to a to how would run as a third party.

Kim Carson: 10:06

Okay. I think I’m getting it. Could you give an example of what a healthy EBITDA margin might look like for an optometry practice? And at what percentage would you say it begins to be a red flag?

Annelies Calnan: 10:24

So healthy. It kind of it depends on where you are in your cycle and where the kind of the life cycle of the business, 15 to 20% or more is usually pretty healthy. Probably 20 is would be healthier. But yeah, those red flags really depend on that life cycle. So if you were in a growth stage and you’ve invested in people and maybe a space that’s larger than what your revenue is, kind of showing those, those investments in the business as a whole might not be reflected in your top line revenue or and then your profitability just yet.

So your cost might be a little overloaded at the beginning and when you’re growing. But then once you get to kind of a steady growth, then that kind of 15 to 20% would be healthy, right?

Kim Carson: 11:15

I think of it kind of like, and maybe this is going to be a horrific example. So please, we can cut this out if it is, and I will leave that part in if it is a good example. But when you start or when a baseball team, like when MLB starts and a team faces another one and then one of them has a win and one of them doesn’t, and you get those insane metrics where, let’s say the winning team had a home run hit. So then that batter has like this insane batting percentage, but it’s because we’ve only seen them in one game and they did good in that one game. So you end up with like the most crazy metrics because you just don’t have as big of a sample pool.

So you can’t say that Batter is going to have that insane metric the entire season because they haven’t played the rest of the games.

Annelies Calnan: 12:06

Yeah. And they haven’t. You know, you might have paid top dollar for the, you know, fresh new grad pick out of the baseball academy, but they haven’t melded with the team yet and been able to generate the kind of the impact that they should eventually or you, you know, if you’ve done a big renovation, you’re paying a lot more for your rent, you’ve moved into a bigger space. You might not see that reflected in your revenue in the first year. Yeah, that might take a bit for the patient base to grow into the space in order to then see that revenue then kind of grow to a more normalized rent as a percent of that of that, or yeah, rent as a percent of that revenue.

Kim Carson: 12:52

Yeah. It just needs to, yeah, the time to make it make sense.

Annelies Calnan: 12:56

Exactly.

Kim Carson: 12:57

I see, so are there other metrics that we should be aware of or that you use when assessing practices that maybe need a bit more explanation to anyone wanting to enlist your services?

Annelies Calnan: 13:11

Absolutely. So EBITDA I is just one piece of the puzzle. So, you know, that looks at your what that the kind of operating profit of that practice is, but it doesn’t take into account the debt. And so we do look at that, you know, where that debt is lying. Do you have old assets?

So the balance sheet is hugely informational. I always say you can’t look at one piece. There are two sides of the same coin. You need to look at both. They interact with each other constantly.

They are. You don’t have a full picture of even just the financials by looking at one side. So we’re looking at that balance sheet. We’re seeing, you know, the age of assets. Where is their balance.

Those kind of assets where things are sitting are your accounts receivable blowing up and you’re not, you know, collecting the revenues that you should. Are your liabilities being paid down in a timely manner, or is there some issue there from those that, you know, income statement and the balance sheet that out of that flows the cash flow statement. And with that you can see is that is the business actually generating positive cash flow? Or are there some issues that are putting some strain on the business that you might not see within just that EBITDA number? So there are a lot of different factors to look at.

And those are just I’m just touching on the financial statements. There’s all the other, you know, information for is your lease about to expire? Is that going to go up? But there’s so many factors that we look at Ebit as just one, one little piece of the puzzle. I mean, a pretty important piece, but just one piece.

Kim Carson: 14:46

It might be like a corner edge piece or something like the crucial.

Annelies Calnan: 14:50

The crucial piece of the.

Kim Carson: 14:51

Puzzle. Could you give an example? Yeah, you said that. So we know that it doesn’t account for debts. What are some common debts that you would see on a balance sheet?

Annelies Calnan: 15:03

Yeah. So it’s largely bank loans that would be, you know, taken out to make investments with to the business. So taken out to, you know, build out a new facility or whatever it might be. So those are the main, the kind of largest debts we would see. There’s also debts related to practice equipment.

So those pieces of equipment are not cheap. So those will be usually on that on that balance sheet. Those are the major pieces that we see are the just, you know, regular old debts. Yeah.

Kim Carson: 15:38

Regular old debts. Okay. Perfect. So one of the many things you do is strategic assessments on businesses or on practices. Sorry, have you ever done a strategic assessment and the person who has paid you to do so.

Was surprised by either their EBITDA or what’s happening on their balance sheet or, you know, like do odds generally know their score in the game when they come to you? Or does a strategic assessment, like literally blow them out of the water and they’re like, I had no idea that this is what was going on.

Annelies Calnan: 16:19

I think it’s a bit of a mixed bag. I think one piece that and maybe this is I mean, yeah, in, in all of these is knowing whether they’re paying themselves fairly and how that impacts that EBITDA. So sometimes we’ve had odds where they’re underpaying themselves significantly. And from that strategic assessment, you know, you see that their, you know, their value might be eroded and that’s more for a divestiture. But their value might, they might think that, you know, their cash flow is fine.

And they’re, they’re going to be, they’re going to get this wild valuation, but they haven’t factored in their pay. That’s kind of a common theme throughout my many years of looking at these practice financials, that the profitability is seen as what they put in their pocket, but they’re not factoring in their either their pay or their replacement pay.

Kim Carson: 17:16

The salary that is associated with them.

Annelies Calnan: 17:18

Exactly. And that revenue is generated by an individual. And so you need to have pay contemplated in for that. In terms of strategic assessment, there’s a lot of I think the major you know, looking at where they are with their staffing and seeing, you know, they’re generating a huge amount of revenue, but it’s getting eaten up quite significantly by either underperforming odds that have a base compensation and they’re not strictly on production pay. And that can eat away at your, your profitability or your staffing.

You’re way too overstaffed. And that eats away at that again. And it’s just looking at where, you know, where that you get to your EBITDA. But then what is driving that low EBITDA or EBITDA? Where are you?

Where are you? What factors are coming into that to get to that number?

Kim Carson: 18:09

Okay. Well, I have one last question for you. And before I do, I’ll point people to our sponsor again. So that is marketing4ecps.com. marketing4ecps.com.

So what would you say are some of the things anyone listening could prepare to really know what’s happening on their books so that maybe some of those things like, oh, it turns out I wasn’t paying myself enough. Like, so they’re not surprised by that. Or you don’t have to be like the bearer of bad news, like your profitability got upset. What would you say would be some things that anyone listening could prepare themselves for?

Annelies Calnan: 18:47

I think, I mean, I think that the main thing that people need to know is that the numbers aren’t scary. I know that sometimes it’s uncomfortable to go into something you don’t know, but or aren’t comfortable in. But it just takes practice at looking at it and just consistently looking at those numbers and seeing where, where those what those margins are. So if you’re looking at everything and, you know, finding what as a percentage of revenue, what are your, what is your staffing? Does that seem like a reasonable amount of your top line to go to staffing and all of those pieces to just look at those margins and see where things might be a little out of out of whack and have just more comfort with looking at it and letting the numbers speak to you, which I know is might not be in everyone’s wheelhouse right now, but it does come eventually and just keep going with it and keep like, just have that.

They’re not that complicated there. It will eventually talk to you. And just having that, taking the time to look in and see what’s going on, and find a way that it makes sense to you so that you can keep looking at that and have an understanding of where what’s going on in your own business.

Kim Carson: 20:09

I mean, and not to turn this into any sort of sales pitch, but you have explained EBITDA and a lot of aspects of your job to me several times over, including in this podcast. So if anyone wanted to get in contact with you, how should they do that? Then you could help them make it make sense.

Annelies Calnan: 20:29

Yeah, absolutely. No. And that’s, I mean, I’ve been, I’ve been discussing financials and financials with odds and other health care providers for about ten years now. So it’s it is I mean, one of the things is I, I mix up iris and pupil sometimes and an OD would never do that. And so but I was not trained on it.

And it gets mixed up sometimes. So I completely understand that this is not where a lot of people are comfortable or, or even want to focus their efforts. So yeah, I love explaining and kind of diving in with odds. But anyways, where can you reach me? There’s a, on our website, we have an intake kind of page that gets put through to, to our team.

If you have any questions or any, any pieces that you’d like to get in touch with us for.

Kim Carson: 21:24

Nice. Okay. Well, thank you so much for listening today. And that is the show. So if you want to hear more, you can at Cleinman.com and wherever you like to listen.

Thanks, Emily. Thank you.

Outro : 21:37

Thank you for listening. At Cleinman, we take pride in helping our partners unlock their full potential. Subscribe to get the newest episodes or visit us anytime at Cleinman.com.

See What Our Clients Are Saying

The true measure of our work is the success of the practice owners we serve. Hear from doctors who have partnered with Cleinman and discovered the clarity, growth, and lasting impact that come from having a trusted business partner at their side.

Working with Cleinman has been a game changer for our practice.

Their powerful mix of one-on-one consulting with seasoned industry experts and small group collaboration with like-minded doctors has completely transformed how we run our business. We’ve seen more growth in the past two years with Cleinman than we did in our first decade!

Kimberly Folwarski Brown

Within just 15 months of working with Cleinman Performance Partners, as owners, my wife and I became more confident in making purchasing decisions and understanding their financial impact. We’ve also improved efficiency with patient/doctor time, driving growth. Additionally, ideas from our Cleinman Network peers have led to significant positive changes in our practice.

Joe Vincent

Cleinman Performance Partners has helped me understand what I didn’t know about operating a business, especially in optical retail. I continue to learn and grow, which has led to my success as a business owner.

Long Do

I’ve been working with Cleinman Performance Partners for over 20 years because it has greatly benefited me to have them behind me with their real-world, expert knowledge, helping me to make important decisions in my practice. I couldn’t have gotten to the level I’m at now without them.

Rob Lavoie

April 28, 2026

Alan Cleinman

[Ownership] Proactive Planning in Your Practice for Software, Medical Niches, and the Community

April 22, 2026

Alan Cleinman

Here’s a glimpse of what you’ll learn: In this episode… Growth is the dream of every independent practice owner, but the path to achieving it is rarely straightforward. From navigating financial hurdles to managing teams and creating systems that actually work, the challenges can feel overwhelming. So how do thriving practices make the leap […]

September 17, 2025

Kim Carson

Hiring For Optometry Practices: How to Find and Retain Top Talent

Finding and keeping the right people for your optometry practice isn’t just about filling roles, it’s about building a team that truly fits together and wants to grow. To do that, you need more than a job posting; you need a clear sense of who you are, what you offer, and what kind of talent […]

August 6, 2025

Cleinman

Benefits of Partnering With An Eye Care Consulting & Marketing Agency

Running a successful eye care practice today is a balancing act. Between patient care, team management, business operations, and marketing, it’s a lot to juggle. But in a competitive landscape, growth and efficiency don’t happen by accident. That’s where strategic partners come in. You don’t have to do it all alone! At Cleinman Performance Partners […]

June 24, 2025