Mergers and acquisitions in the Rehabilitation sector continued the climb that began in 2014, with a 21% increase in deal volume since 2015.

Mergers and acquisitions in the Rehabilitation sector continued the climb that began in 2014. A total of 40 deals were announced in 2016, up 21% compared with the year before, and 90% higher than in 2014. This fragmented sector has benefited from the growing emphasis on post-acute care and cost efficiencies, similar to the Home Health sector. Like physician medical groups, targets in this sector tend to be small, privately held operations and their acquisitions aren’t always publicly announced. For that reason, the data may underrepresent the actual interest in this field.

Twenty-four buyers announced 40 deals in 2016. Four publicly traded corporations announced eight deals, with U.S. Physical Therapy, Inc. and Global Medical REIT making three each. Among the privately held acquirers, Professional Physical Therapy (aka ProPT) announced five deals, and ATI Physical Therapy and U.S. Healthworks announced four deals each.

The largest deal in this sector was announced early in the year, as Select Medical Holdings Corp. announced its $400 million acquisition of Physiotherapy Associates Holdings in January. The Sanders Trust, a Birmingham, Alabama-based REIT, made the second largest transaction, paying $111.5 million for the real estate interests in three rehabilitation hospitals in Texas. Select Medical Holdings appeared again in the third largest deal of the year, this time as the seller. Together with its subsidiaries Select Medical Corporation and Select Medical of New York, Inc., the company sold its contract therapy business to Encore Rehabilitation Services, LLC, a portfolio company of Revelstoke Capital Partners.