Physical therapy services are a large part of the health care industry. In fact, there are some 34,300 physical therapy clinics in the US classified under SIC 8049 and NAICS 62134. Together these businesses generate over $24.5B in annual sales. There are just over 309,000 professional therapists and staff employed in this health care sector.
The average physical therapy clinic does about $715,000 in annual receipts and employs a staff of 9.
Professionally managed physical therapy centers with strong relationships with the referring doctors are attractive acquisition targets. The typical buyers are competitive clinics or investors looking to expand their holdings in the growing health care industry.
Business value by market comparison
Selling prices of physical therapy clinics give you a strong indicator of what such a business is worth on the market. You can develop a set of valuation multiples from sold clinics for direct comparison to a physical therapy practice you want to value.
Here are the typical valuation multiples used to appraise physical therapy businesses:
- Business sale price to annual revenues plus inventory.
- Business sales price to SDCF
- Sale price to EBITDA
Example: valuing a small physical therapy clinic
To see how other practice sales can shed light on your clinic value, let’s consider a typical practice with $600,000 in annual sales and inventory of $150,000.
We apply a set of valuation multiples based on revenues to calculate the clinic value as follows:
|Multiple||Multiple value||Business value|
|Average Business Value||$544,725|
While the average of all the figures above is one way to report the physical practice value, you can also consider the range of values in the above calculation. In this case, our sample clinic value would value somewhere between $402,060 and $712,500.
This range reflects the market uncertainty such as the conditions of the business sale, access to acquisition capital, and specific objectives of the buyer and seller that may well affect the ultimate business selling price.