Physical Therapy Practice Valuation
29 valuation methods · 43 industries · Results in under 10 minutes
In short
A physical therapy practice is valued on normalized EBITDA, after the owner-therapist's clinical pay is reset to market. VA chooses the multiple from the payer mix, because commercial insurers pay more than Medicare for the same visit.
Who this is for
Owners of outpatient physical, occupational and sports therapy practices considering a sale to a therapy group or a partner buyout, and group owners adding clinics who need earnings normalized and payer mix read correctly.
How is a physical therapy practice valued?
VA values a physical therapy practice on normalized EBITDA: earnings after the add-backs you confirm, including resetting the owner-therapist's clinical pay to what it would cost to hire a clinician to do that work. The multiple applied to that EBITDA is chosen from the payer mix, because commercial insurers pay more than government plans for the same care. A group of clinics is valued in layers: established clinics, recently acquired clinics and new clinics still ramping up are each treated on their own terms. A discounted cash flow checks the result, and comparable companies and precedent transactions sit alongside it. This tool is informational only. Output is driven by your inputs and does not constitute a formal appraisal or certified valuation.
What drives the value of a physical therapy practice?
- Payer mix: commercial insurance, Medicare and workers' compensation pay different amounts per visit
- Visits per clinician per week and how full the schedule is
- Referral sources, and how dependent the practice is on a small group of physicians
- Clinician retention, and how much of the caseload the owner treats personally
- Growth in established clinics
- The number of clinics, and the share still ramping up after opening
What lowers the value of a physical therapy practice?
- A payer mix weighted to Medicare and Medicaid
- Therapist turnover and unfilled schedules
- Referrals that depend on a few physicians
- Revenue that depends on the owner-therapist treating patients
How much is a physical therapy practice worth? A worked example
Payer mix in a physical therapy group
A group of six established physical therapy clinics has $1.4 M of normalized EBITDA. With half its revenue from commercial insurers, the clinic model applies about 9.1× at the middle of its range: about $12.8 M before debt and before its discounted cash flow check. If commercial insurers paid 30% and government plans the rest, the multiple would be about 8.3× and the value about $11.6 M.
Illustrative figures from the industry model alone. A full report blends it with a discounted cash flow, comparable companies and precedent transactions.
Value your physical therapy practice in under 10 minutes
- 1.Upload your financial statements, or type the figures in.
- 2.Confirm the add-backs and the industry details the model asks for.
- 3.Get a valuation range, the methods behind it and a PDF memorandum.
Which numbers matter most?
Normalized EBITDA
Earnings before interest, tax, depreciation and amortization, after the add-backs you confirm. It is the figure the multiple is applied to.
Commercial payer mix
The share of revenue from commercial insurers rather than government plans. It sets which multiple VA applies to normalized EBITDA.
Patient visits
Visits per week and per clinician show how full the schedule is and how much room a buyer has to grow it.
Clinicians
The number of treating therapists. Buyers read visits per clinician to judge productivity and dependence on the owner.
Reimbursement per visit
Average collected revenue per visit. VA uses it to check revenue against volume, not to rebuild the revenue.
What do you need to value a physical therapy practice?
- Profit and loss statements and balance sheets, ideally for the last three years
- Figures for the current year to date
- A list of add-backs: the owner's pay and perks, and any one-off costs
- Loan and lease balances
- Revenue by payer: commercial insurers, Medicare and Medicaid, and patients paying directly
- The number of clinics, and when each was opened or acquired
- Visits per week and revenue per visit
Example scenarios
A Medicare-heavy caseload
Two practices see the same number of patients and earn the same. One treats mostly Medicare patients; the other mostly patients with commercial insurance. VA applies a higher multiple to the second, because each visit is paid at a higher rate.
A new clinic in its first year
A practice opened a clinic that is not yet full. VA values that clinic on its own terms, as one still ramping up, instead of letting its early losses reduce the value of the established clinics.
Further reading
How to Value a Dental Practice: Collections, EBITDA, and What DSOs Actually Pay
Dental practice valuation explained: the percentage-of-collections rule, when EBITDA multiples take over, what drives DSO offers, and a worked example for a $900K practice.
Is a Business Worth 3 Times Profit? When It Is 2x, When It Is 5x, and Which Profit Counts
Is a business worth 3 times profit? Often, if the profit is SDE. When 2x or 5x applies instead, which profit counts, and what diligence does to the price.
How Much Is a Business Worth With $500,000 in Sales? The Revenue Ladder From $100K to $3 Million
Revenue does not set a price, earnings do. See what businesses at $100K, $200K, $300K, $500K, $1M, $2M and $3M in sales are worth at 10%, 20% and 30% margins.
Frequently asked questions
Why does payer mix change the multiple?
The same visit earns different amounts depending on who pays. VA reads the share of revenue from commercial insurers and applies a multiple to match, so a Medicare-heavy practice is valued lower than one with the same earnings from commercial plans.
Do new clinics lower my value?
No. New clinics still ramping up are valued as their own layer, so their early losses do not reduce the value of the established ones.
How is my own pay treated?
In the wizard you confirm the add-backs, including resetting your clinical pay to what it would cost to hire a therapist to do that work. The normalized EBITDA that results is what the multiple is applied to.
Is this a certified appraisal?
No. This is an informational estimate. A bank loan, a partner buyout or an estate matter may require a certified business appraisal, which this does not replace.
Does visit volume matter if I report revenue?
Visits per week times revenue per visit is used as a consistency check against reported revenue. If the two differ widely, the model trusts reported earnings and uses the payer mix only to pick the multiple.
How are newly opened clinics valued?
In the clinic model, newer clinics are valued on their expected ramp toward the group's earnings, discounted for the time it takes, rather than at the full multiple of established clinics.
Terms used on this page
- Normalized EBITDA
- EBITDA after add-backs, so it shows what the business earns in a normal year under a new owner.
- Add-backs
- Costs added back to reported earnings because a new owner would not bear them: personal expenses run through the business, one-off costs, or owner pay above what the role would cost to fill.
- Payer mix
- The split of a practice's revenue between commercial insurers, government plans such as Medicare and Medicaid, and patients who pay directly.
- Valuation multiple
- The number earnings are multiplied by to reach a value. It rises with how durable the earnings are and how easily a new owner can keep them.
As featured in
Value your physical therapy practice
Get a valuation range with the methods behind it and a PDF memorandum in under 10 minutes.
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Last reviewed September 25, 2026 against VA's valuation models.