Physical Therapy Sector Overview


Introduction to Physical Therapy

Physical therapy (PT) is a healthcare offering focused on the preservation, enhancement or restoration of movement and physical function impaired by disease, injury or disability. Common treatment applications include therapeutic exercise, physical modalities, assistive devices and patient education.

Why Use Physical Therapy?

The Benefits

  • Low-cost alternative to surgery and pain medication
  • Prevents future diseases or illnesses, and leads to improved patient quality of life
  • Provides a safer alternative in lieu of pain medications and surgery
  • Reduces readmission rates, driving savings for both payors and providers

Statistics and Trends

  • On average, U.S. physical therapy clinics see anywhere between 100 to 200 patients weekly
  • According to the U.S. Bureau of Labor Statistics, there were 229,740 licensed Physical Therapists in the U.S. as of May 2022, a figure that is expected to grow moving forward

Select Physical Therapy Services

  • Orthopedic therapy: Diagnose, manage and treat disorders or injuries of the musculoskeletal system
  • Geriatric therapy: Covers a wide variety of issues concerning people as they experience normal adult aging
  • Neurological therapy: Focused on working with individuals who have a neurological disorder or disease
  • Pediatric therapy: Specialize in the diagnosis, treatment and management of infants, children and adolescents
  • Sports therapy: Work with athletes, amateur or professional, to heal injuries suffered while playing sports – a more specialized form of physical therapy

Sources: Publicly available information

Physical Therapy Market Overview

Sector Overview

  • The U.S. physical therapy market was valued at $48.8B in 2022 and is expected to grow at a 3.6% CAGR through 2030
  • The amount of Americans ages 50 and older are growing in numbers, effectively increasing the number of treatments and Physical Therapists needed to meet the additional demand
  • Innovations in orthopedic surgery practices are leading to expanded outpatient PT services post-surgery
  • Teaching patients about disease management, prescribing home exercise programs and creating safe discharge plans could be a key disruptor to the PT industry

Physical Therapists per 100,000 People

Key Metrics (2022-2023)

$48.8 Billion
Estimated Market Size
Estimated Market Growth Rate
Number of PT Clinics
Operators with > 10 Locations
Average Physical Therapist Salary

Projected Market Growth

Sources: Publicly available information

Industry Headwinds and Tailwinds


Aging U.S.
The Population of people 50+ is increasing each year, leading to proportionate growth across chronic and age-related disorders
Highly Competitive, Fragmented Market
Private equity-led consolidation is a growing theme in the Physical Therapy market, positioning established platforms, with set infrastructure, for continued growth
Increase in
Active Lifestyles
The U.S. is trending towards an active, health-centric lifestyle, leading to a higher chance of rehabilitation therapy stemming from acute injuries
Reform of
Rehab Favoring Active Therapy
Pain management from sports, chronic and age-related injuries or ailments, are moving towards movement therapy and away from opioid and medication usage


  • The U.S. physical therapy market is trending towards creating more jobs and benefiting from increased capital driven by lifestyle changes and treatments. The competitive PT market is slowly consolidating to offer the most innovative therapies and medicine prescribed to patients.


Barriers to
Access of PT Services
Direct access to PT care is continuously improving, but the payment structure of therapy practices makes completing a full course of PT care challenging for many Americans
Surgical Advancements
Surgical safety innovations and new minimally invasive procedures have allowed more advanced treatments to be performed in outpatient settings (more incentive to get surgery vs. PT)
Future Physical Therapist Shortage
High demand and low unemployment rates are due in large to the number of therapists retiring – in 2019 ~49% of physical therapists were between ages 50-64, compared to 32% in 2010
Reimbursement Cap for Certain Therapies
High claim denials are the main limiting factor in the therapy market as of right now due to a reimbursement cap placed on Physical and Occupational Therapy


  • Payment structure and physician shortage will be two of the main forthcoming issues that could potentially slow the growth of the PT sector. Claim denials and access problems for smaller communities can be mitigated, helping the PT market keep pace with strong, continuous growth.

Sources: Publicly available information

Physical Therapy Services Landscape

Why do Patients Seek Physical Therapy?

  • Orthopedic Rehabilitation services account for ~59% of all care provided in the industry, including but not limited to recovery and rehab from orthopedic surgery
  • There are over ~48,700 total physical therapy clinics in the U.S. as of December 2022, including in-patient and out-patient
    • A highly fragmented market moving towards consolidation with large PE firms
  • 127 million Americans (1 in 2 adults) are affected by a musculoskeletal condition that can be improved by physical therapy

Physical Therapy Demand Drivers

Increased Active
Aging US
Decreasing Barriers to Direct Patient Access
Increasing Demand for Non-opioid Therapies
Projected Increased Provider Count through 2030

Source: HealthcareAppraisers, IBISWorld

Fragmented Landscape & Payor Mix

Despite years of private equity-led consolidation, the physical therapy market and payor mix remain highly fragmented.

  • There are ~48,700 physical therapy clinics in the U.S, with very few nationally-scaled providers
    • No single provider accounts for more than a 10% market share based on clinic count
    • There has been recent consolidation activity both among private equity sponsored platforms and publicly traded companies
  • Outpatient physical therapy providers benefit from a diverse industry payor mix weighted toward commercial payors with stable reimbursement rates, as well as limited private pay components, leading to reliable performance during recessions
  • The introduction of Medicare Merit-Based Incentive Payment Plan is essential for the Physical Therapy market to grow. Over 1/3 of the payments made in physical therapy are from government led payor programs

Market Share Based on Clinic Count

Average Outpatient Physical Therapy Payor Mix

Source: HealthcareAppraisers, IBISWorld

Future Market Challenges & Protective Legislature

Recent Physical Therapy Legislature

The Physical Therapist Workforce and Patient Access Act (H.R. 3759/S. 2676)

Allows physical therapists to participate in the National Health Service Corps Loan Repayment Program. This program assists primary care, mental health, and dental providers in repaying eligible student loans in exchange for working in areas with shortages of such providers

The Allied Health
Workforce Diversity Act (H.R. 3320/S. 1679)

Allows the DHHS to provide grants to accredited education programs increasing diversity in the physical therapy, occupational therapy, respiratory therapy audiology, and speech-language pathology professions. Grants may be used to provide scholarships or support for recruitment and retention of students from underrepresented groups

Physical Therapy Act of 2021

Physical therapists to receive payment under Medicare for services provided to the patients by another physical therapist through a qualifying temporary arrangement, regardless of the geographic area or population served

Projected Physical Therapist Supply and Demand

  • As of 2022 The Bureau of Labor Statistics ranks physical therapists as the 11th fastest growing career in the U.S. with an unemployment rate of 1.0%, and an average salary of over $97k
  • The shortage for practicing physical therapists is projected to be on average 16k for each of the next ten years until 2030 for physical therapy related jobs
  • High demand and low unemployment rates are due in large to the number of therapists retiring in the coming years

Source: HealthcareAppraisers, IBISWorld

Key Participants

Select Private Equity-Backed Operators

Initial Investment May 2021 December 2020 November 2016 January 2022
Geography Wisconsin &
South Carolina
California, Washington & Wyoming East Coast Locations
U.S. Locations
22/50 States
Locations as of December 2023 245 locations 212 locations 985 locations 393 locations
Locations Added 4 add-ons &
18 locations
4 add-ons &
83 locations
2 add-ons &
56 locations
1 add-on &
64 locations

Source: Respective company websites

Notable Physical Therapy Transactions

Date Target Acquirer Transaction Type
June 2023 Was acquired by Platform
November 2023 Was acquired by Add-On
April 2023 Was acquired by Add-On
February 2023 Was acquired by Add-On
February 2023 Was acquired by Add-On
November 2022 Was acquired by Add-On
November 2022 Was acquired by Add-On
May 2022 Was acquired by Add-On
May 2022 Was acquired by Add-On
April 2022 Was acquired by Add-On
April 2022 Was acquired by Add-On
April 2022 Was acquired by Platform
April 2022 Was acquired by Add-On
February 2022 Was acquired by Add-On
February 2022 Was acquired by Add-On
January 2022 Was acquired by Platform
January 2022 Was acquired by Add-On
January 2022 Was acquired by Platform
December 2021 Was acquired by Add-On
December 2021 Was acquired by Add-On
December 2021 Was acquired by Platform
December 2021 Was acquired by Add-On
November 2021 Was acquired by Add-On
August 2021 Was acquired by Add-On
July 2021 Was acquired by Add-On
May 2021 Was acquired by Platform
May 2021 Was acquired by Add-On
April 2021 Was acquired by Add-On
March 2021 Was acquired by Add-On
December 2020 Was acquired by Platform
Private Equity platform investment

Select Transaction Case Studies

The Establishment of Physical Rehabilitation Network

Company Overview

Founded in 1991, Physical Rehabilitation Network ("PRN") maintains an owner-operator clinic model, which allows for the development of the physical therapy practice without the administrative burden providers typically face.

Transaction Positioning

Gryphon Investors made their third physical therapy investment with the acquisition of PRN in 2020. At the time of the transaction, PRN consisted of over 200 clinics in more than 12 states.

Acquirer Overview

Gryphon Investors is a leading Private Equity firm focused on partnerships with experienced management teams and their companies to enhance profitability and generate competitive market advantages. The firm has deployed over $5.0 billion of capital since 1997.

Physical Therapy PE Market Overview

Source: Respective company websites

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