What Is a Physical Therapy Practice Worth?
Physical therapy practices sell for 2.5x to 4x SDE or 5x to 8x EBITDA, with payer mix, therapist retention, and owner dependency driving the multiple.
Most independent physical therapy practices sell for 2.5x to 4x Seller's Discretionary Earnings (SDE), while multi-clinic groups trade at 5x to 8x EBITDA. A single-clinic practice generating $200,000 in SDE typically sells between $500,000 and $800,000. Payer mix, therapist retention, and owner dependency are the three largest multiple drivers in 2026.
What It Is
A physical therapy practice is valued using earnings multiples — not revenue multiples. Buyers apply one of two methods depending on the size and structure of the clinic. Our business valuation calculator runs both methodologies and adjusts for PT-specific risk factors in under five minutes.
SDE (Seller's Discretionary Earnings) is used for owner-operated clinics where the owner plays a daily clinical or management role. SDE measures what a single full-time owner-operator takes home annually — including salary, health insurance premiums, auto allowances, and non-recurring expenses added back. Typical SDE multiples in 2026 run from 2.0x to 4.0x. For a complete walkthrough of the SDE calculation, see our guide to Seller's Discretionary Earnings.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the standard metric for practices with professional management, multiple clinics, and owner dependency below 20% of clinical production. EBITDA multiples in 2026 run from 4.5x to 10x+, with private equity platform deals anchoring the top of the range.
Why It Matters
Three valuation bands apply to the vast majority of PT practices selling this year:
- Single clinic, owner-operator ($100K-$350K SDE): 2.5x to 3.5x SDE — roughly $250K to $1.2M in enterprise value
- Multi-clinic group, 2-4 locations ($500K-$2M EBITDA): 4.5x to 6x EBITDA — $2.3M to $12M in enterprise value
- Regional group, 5+ locations ($2M+ EBITDA): 6x to 10x EBITDA, with platform-quality assets commanding the top end from private equity buyers
The single biggest driver of where you land inside those ranges is payer mix. Practices heavily dependent on Medicare — which faces another 3.4% fee schedule reduction in 2026 — typically trade 0.5x to 1.0x lower than practices with majority commercial and cash-pay revenue. Workers' compensation payers sit in between. Add 10 percentage points of commercial share, and expect roughly 0.5x on your multiple.
How to Use It
Start by calculating your trailing twelve-month SDE or EBITDA. Then adjust for the five factors buyers scrutinize most closely:
- Payer mix diversification: Commercial insurance above 50% is the threshold for premium multiples
- Therapist retention: Turnover above 25% costs 0.5x to 1.0x on the multiple
- Owner dependency: Personally treating more than 40% of visits triggers aggressive buyer discounts
- Referral concentration: No single orthopedic group or hospital system should drive more than 15-20% of new patients
- Lease terms: At least 5 years remaining, with renewal options, on every clinic location
An owner treating 30 patients per week while also running the business will almost always sell for less than a same-size practice where the owner manages a team of four treating therapists. The consolidators active in PT — ATI, Upstream Rehabilitation, Athletico, H2 Health, and a growing list of regional PE-backed platforms — will not pursue a practice where the owner is indispensable to clinical volume. Our exit planning resources show how to systematically reduce owner dependency in the 24 months before sale.
For a quick ballpark, multiply your trailing twelve-month SDE by 3.0 as a midpoint, or EBITDA by 5.5 if you have multiple clinics. That is your baseline. Then layer in adjustments for payer mix, retention, referral concentration, and owner dependency. For the full methodology with a worked example, read our 2026 PT practice valuation guide.
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Key Takeaways
- ✦Most single-clinic physical therapy practices sell for 2.5x to 4x Seller's Discretionary Earnings (SDE)
- ✦ Multi-clinic PT groups (3+ locations) trade at 5x to 8x EBITDA, with PE platform deals reaching 10x+
- ✦ A 10-percentage-point shift from Medicare to commercial insurance adds roughly 0.5x to the multiple
- ✦ Owners who personally treat more than 40% of patient visits face 1.0x to 1.5x multiple discounts
- ✦ Therapist retention above 85% for three consecutive years is a premium signal worth 0.5x to 1.0x
- ✦ A practice generating $200K in SDE typically sells for $500K to $800K in 2026
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