How is a physical therapy practice valued?
A physical therapy practice is valued by applying an EBITDA multiple to normalised earnings: profit before owner compensation, less the market cost of replacing the owner’s clinical hours. Single-location and add-on PT deals clear 5x to 7x that figure; regional platforms with $1M or more in EBITDA price at 7x to 9x, with payer mix moving the multiple in either direction.
Physical Therapy Practice Valuation Calculator
Most PT valuation calculators ask for revenue and hand back a multiple. That skips the adjustment every buyer makes first: if you treat patients, whoever buys your clinic has to hire someone to cover your caseload, and that cost comes out of earnings before any multiple is applied. This one asks about it, because on a single-location practice it is usually the difference between a real number and a flattering one.
No email required. Nothing is stored or sent anywhere. The arithmetic runs in your browser, and every step of it is shown next to the result.
Inputs
Your clinic
What you actually collected, not what you billed.
Everything left after rent, staff, supplies and billing, but before any owner salary, distributions or personal expenses run through the clinic.
Salary plus benefits and payroll tax for whoever would carry your caseload. Use a real number from your own market: what you last paid, or what a recruiter quoted you. If you also run the clinic day to day, add what an office manager would cost.
Estimated range
Add your replacement cost.
You said you treat patients. Until we know what covering your caseload costs, any valuation would overstate your earnings, which is exactly the mistake that makes an offer look better than it is. There is no default here on purpose: therapist pay varies too much by market for a made-up number to help you.
Multiple bands and the payer-mix adjustments come from Sorso’s PT EBITDA multiple research. The revenue and location points at which we switch you to the platform band, and the cash-pay share at which the premium applies, are Sorso modelling assumptions rather than published figures. This is an estimate for planning, not a valuation opinion, and no real transaction should be priced from it.
The adjustment that decides your number
Owner-operated physical therapy has a structural quirk that dental and dermatology mostly do not. In a lot of clinics the owner is also the highest-producing therapist. The practice looks profitable because the person generating a large share of the revenue is paid out of whatever is left rather than at market rate.
A buyer cannot inherit that. The day you leave, someone has to see your patients, and that person expects a salary, benefits and payroll tax. So the first thing a competent buyer does is add back everything you personally took out, since it is discretionary, and then subtract what your replacement costs. Those two moves frequently cancel out. On a full clinical caseload with a modest owner draw, the second one is larger.
This is why two clinics with identical collections and identical bank balances can be worth very different amounts. The one where the owner stopped treating two years ago and hired a therapist already absorbed the cost. The one where the owner still carries thirty visits a week has not, and the adjustment lands during diligence instead, usually after an offer has been anchored higher.
The calculator above will tell you plainly when the answer is that there is no enterprise value at all. That happens, it is common in single-location PT, and it is far better to learn it from a free tool than from a buyer’s quality of earnings report.
How to value a physical therapy practice
- 1
Start with profit before you pay yourself
Everything left after rent, staff, supplies, billing and equipment, before owner salary, distributions, or personal expenses run through the business. If your P&L already nets out owner comp, add it back.
- 2
Subtract the cost of replacing your clinical hours
Price a therapist who would carry your caseload in your market, including benefits and payroll tax. If you also run the clinic day to day, add an office manager. What remains is adjusted EBITDA, and it is the only earnings figure a buyer will negotiate from.
- 3
Apply the band that matches your size
Single-location and add-on deals clear 5x to 7x adjusted EBITDA. Regional platforms and multi-location groups with $1M or more in EBITDA price at 7x to 9x. Scale is doing most of the work in that gap, not clinical quality.
- 4
Move the multiple for payer mix
Medicare above roughly half of revenue takes a discount, because buyers price in reimbursement risk. A diversified commercial mix with real cash-pay volume takes a premium. Both adjustments are shown as separate line items in the calculator rather than baked in silently.
- 5
Sanity-check the margin, not just the multiple
Divide adjusted EBITDA by collections. That percentage is what a buyer opens with, and it is usually lower than the number an owner has in their head — which is the point of doing this before anyone else does it to you.
The multiple bands and payer-mix adjustments above come from Sorso’s research on what PE buyers actually pay for PT clinics, which cites the underlying CMS and APTA reimbursement sources. For the cross-specialty view across dental, dermatology, med spa and the rest, use the general practice valuation calculator.
Thinking about selling your physical therapy practice
Outpatient PT has been one of the more active healthcare consolidation segments, which means a single-clinic owner who puts the word out will usually find interest. Finding interest and getting a defensible price are different problems.
The work that moves the number happens before you talk to anyone. Financials that reconcile to tax returns. An add-back schedule you can defend line by line, rather than a verbal claim that some of those expenses were personal. Therapist employment agreements that survive a change of control, because a buyer paying for earnings will discount heavily if the clinicians producing them can walk on day one. Payer contracts and credentialing that transfer cleanly. A lease with enough term left that the buyer is not renegotiating rent in year two.
If you are more than a year from a sale, the highest-return move is usually the one the calculator exposes: reduce how much of the revenue depends on you personally. Every visit you hand to an employed therapist converts owner income into transferable earnings, and transferable earnings are the only kind anyone applies a multiple to.
Common questions
How do you value a physical therapy practice?
You normalise earnings first, then apply a multiple. Start with profit before any owner compensation, subtract what it would cost to replace the owner's clinical hours at market rate, and the result is adjusted EBITDA. Single-location and add-on PT deals clear 5x to 7x that number; regional platforms with $1M+ in EBITDA price at 7x to 9x. Payer mix moves the multiple from there — Medicare exposure above 50 percent takes a discount. A diversified mix with real cash-pay volume takes a premium.
What is my physical therapy practice worth?
Multiply your adjusted EBITDA by the band that matches your size. The single most common error is skipping the owner-replacement step: if you treat patients and pay yourself out of profit, your books overstate what a buyer inherits, because the buyer must hire a therapist to cover your caseload. Run the calculator on this page with a real replacement salary from your own market to see the difference.
Why does a buyer subtract my salary if I am the owner?
They are not subtracting your salary. They are subtracting your replacement's. A buyer is purchasing the earnings that survive your departure. Whatever you personally take out is added back as discretionary, then the market cost of the person who does your clinical work is taken off. For an owner treating a full caseload, those two adjustments often cancel out or go negative.
Does high Medicare exposure lower what I can sell for?
Yes. Buyers underwrite reimbursement risk, and outpatient therapy has absorbed schedule-wide conversion-factor cuts in recent years. Practices with Medicare above roughly half of revenue price at a discount to the base band. Clinics with diversified commercial payers and meaningful cash-pay volume price at a premium.
Is a single-location PT clinic worth selling?
Sometimes the honest answer is that there is no enterprise value to sell. If replacing your clinical hours consumes all the profit, what remains is equipment, the lease and the patient list. That is an asset sale, not an earnings multiple. That is not a failure; it means the practice is a well-paid job rather than a standalone business. Adding therapist capacity or a second location is what creates something that can be sold separately from you.
How do I sell my physical therapy practice?
Decide first whether you are selling earnings or assets, because the answer changes who you approach. If adjusted EBITDA survives replacing your clinical hours, regional platforms and PE-backed groups are real buyers and the price is a multiple. If it does not, your likely buyer is another therapist buying a job, and the price is closer to equipment plus goodwill. Either way the preparation is the same: three years of clean financials that reconcile to your tax returns, a defensible add-back schedule, therapist agreements that survive a change of control, and enough lease term left that the buyer is not renegotiating rent immediately.
How long does selling a physical therapy practice take?
Plan on months, not weeks. Diligence on a clinic of this size typically covers three years of financials, payer contracts, therapist employment agreements and the lease. The preparation that matters most happens before you go to market: clean financials, a documented add-back schedule, and provider contracts that survive the transaction.
Want the number checked by someone who does this for a living?
A calculator gives you a range. It cannot read your payer contracts, spot the add-backs a buyer will reject, or tell you whether your therapist agreements survive a sale. If you are within a couple of years of an exit, those are the things that move the price.
Take the free assessment
Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.