Investment & Consolidation in the Physical Therapy (PT) Sector
August 2024
While recent market pressures and increased capital costs have slowed M&A activity in various sectors, the physical therapy industry continues to exhibit robust transaction volume dating back to the early 2000s. The buyer and investor universe for physical therapy encompasses a diverse range of strategic operators and private equity firms, all drawn to the sector’s proven resilience and growth potential.
Physical therapy remains the primary and most cost-effective treatment option for musculoskeletal (MSK) disorders with numerous value-based care applications. Growing populations of elderly and obese individuals in the United States, coupled with a rising preference for non-opioid pain management alternatives, is fueling a surge in demand for physical therapy services.
Despite strong growth prospects and outsized consumer demand, the sector has not been immune to systemic pressures inherent to the broader healthcare services industry, including rising cost pressures, reimbursement uncertainty, and regulatory changes. As a result, strategic operators and independent practices alike have leveraged mergers and acquisitions to combat these pressures and uncover operational efficiencies.
Although the sector has experienced over two decades of consolidation, the market remains highly fragmented, presenting significant opportunities for continued investment from private equity firms and strategic operators. Established market players continue to fight for leading market positions while private equity investors with developed multi-site healthcare strategies seek scaled market entry points. As multiple private equity-backed platforms consider launching M&A marketing processes over the next two years, the Provident team anticipates that these additional financial sponsors, less familiar with the physical therapy sector, will place premium valuations on selected targets and utilize the proven organic and inorganic growth strategies of these platforms going forward.
Whitepaper Summary:
- Introduction
- Physical Therapy Market Overview
- Investor Thesis – Key Tailwinds
- Key Factors Driving M&A
- Emerging Operational Trends
- Mergers & Acquisitions Trends
- Private Equity Case Studies
- Physical Therapy Asset Value Drivers
- Current National Platform Presence
- Physical Therapy Valuation Overview
- Conclusion
