How to Value an Orthopedic & Post-Surgical Rehab Practice

You’ve built more than a clinic; you’ve built a complex financial asset. A proper orthopedic practice valuation requires looking past simple revenue to see what sophisticated buyers, like private equity firms, will actually pay. This guide gives you the framework we use, showing you how to evaluate your practice using the same metrics that drive major deals in the orthopedic and post-surgical rehab sector.

The Core of Your Valuation is Adjusted EBITDA

The first and most foundational metric we establish is your Adjusted EBITDA. This is the true measure of your practice’s sustainable profitability from a buyer’s perspective.

First, you have standard EBITDA which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. You can get a full breakdown in our guide, EBITDA Explained for Physicians.

We then modify this number to find your Adjusted EBITDA. This process “normalizes” your earnings by accounting for discretionary or one-time expenses. Our goal is to present a clear picture of the cash flow a new owner can reasonably expect. For a detailed explanation of this process, see our EBITDA Normalization Guide.

In an orthopedic practice, typical adjustments involve adding back certain expenses to your bottom line.

• Above-Market Owner Compensation. If you pay yourself a $600,000 salary when the fair market rate for a surgeon in your role is $450,000, a buyer will add back the $150,000 difference.
• One-Time Capital Expenditures. The cost of a new C-arm, MRI machine, surgical equipment upgrades, or a significant office build-out you invested in this year would be added back, as it is not a recurring annual operational cost.
• Discretionary Personal Expenses. We often see items like personal vehicle leases or salaries for family members in non-essential roles run through the business. These are also added back to earnings.

Getting this number right is the starting point for everything that follows. It provides the baseline profit figure to which a valuation multiple is applied.

How to Determine Your Orthopedic Practice’s Valuation Multiple

Your Adjusted EBITDA is only half of the valuation equation. Next, you must apply a market-based valuation multiple specific to your specialty. This multiple is not a static number. It directly reflects a buyer’s perception of your practice’s scale, risk profile, and potential for growth.

The market generally prices orthopedic practices based on their size and strategic role.

Practice Size and Type	Typical EBITDA Multiple Range
Small “Tuck-in” Practices	5.0x – 7.0x
Mid-Sized Independent Practices	7.0x – 12.0x
Large “Platform” Practices	12.0x – 15.0x+

These ranges reflect perceived risk. A buyer views a larger, more diversified practice as a more stable asset with greater growth opportunities, which justifies a higher multiple. This trend is fueled by ongoing private equity consolidation within orthopedics, as larger groups seek to build regional and national platforms. You can learn more by reviewing our guide on Valuation Multiples by Medical Specialty.

Key Factors That Drive a Higher Valuation

Your valuation multiple is not just about your practice’s size. Several operational and strategic factors will significantly increase what a buyer is willing to pay. For an orthopedic group, the following drivers have the greatest impact on value.

• Ancillary Service Lines A practice with integrated services like an ambulatory surgery center (ASC), physical therapy, or in-house imaging is far more valuable than one reliant on surgical fees alone. These services create diversified, high-margin revenue streams.
• Provider Dependencies A practice that depends entirely on the owner’s personal production is a much riskier investment for a buyer. Groups with a strong team of associate surgeons and physician extenders who will remain after a sale command higher multiples.
• Favorable Payer Mix A healthy balance of commercial and government payers shows revenue stability. A heavy reliance on a single government payer can be seen as a higher risk, which may affect your valuation. You can read more about the Payor Mix Impact on Valuation.
• Strong Referral Networks Your consistent, defensible referral relationships from primary care physicians and other specialists are a valuable intangible asset that demonstrates a strong market position.
• Efficient Use of Technology Modern EMR systems and efficient operational processes for scheduling and billing are signs of a well-managed practice that a buyer can easily integrate.

Addressing these areas long before a sale is one of the most powerful Practice Value Enhancement Strategies you can use.

Putting It All Together: A Valuation Example

Here is how these components work together in a simple valuation example for a mid-sized orthopedic group.

• Adjusted EBITDA After normalization, the practice generates $2M in annual Adjusted EBITDA.
• Valuation Multiple Because the group has an ASC, a strong team of surgeons, and multiple locations, we determine a 9.5x multiple is appropriate based on current market data.
• Enterprise Value $2M in Adjusted EBITDA multiplied by 9.5 equals an enterprise value of $19M.

This $19M figure represents the total value of your business. From there, you would subtract any outstanding debt and transaction fees to determine your estimated net proceeds.

A Valuation Is More Than a Number

Calculating a valuation is a necessary exercise, but a number on a spreadsheet is not a firm offer. Sophisticated buyers acquire compelling growth stories. They invest in practices with clear, defensible market positions and opportunities for future expansion.

Common missteps we see are owners getting fixed on a “rule of thumb” multiple or failing to prepare their financials for the rigor of due diligence. A successful sale depends on a structured, competitive process managed by experts who know how to frame your practice’s story to attract the right buyers.

If you want to understand what your practice could be worth in today’s market, an accurate valuation is the foundation of a successful practice transition strategy.

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