Select Medical Goes Private (Again) — The Bigger Story May Be What’s Next

Earlier this week, Select Medical Holdings Corporation (NYSE: SEM) announced that it had signed a definitive agreement to be acquired by an investor consortium led by Robert Ortenzio, Martin Jackson, and Welsh, Carson, Anderson & Stowe (WCAS). The take-private transaction values Select Medical at $16.50 per share, representing an enterprise value of approximately $3.9 billion. The offer reflects a ~25% premium to the 90-day trading average and a modest premium to the non-binding proposal submitted by Robert Ortenzio in November 2025.

At first glance, this appears to be a straightforward public-to-private transaction.  The more interesting story is what this deal could enable strategically.

A Familiar Partnership

This is not the first chapter between the Ortenzio family and WCAS.  Over the past three decades, the group has partnered repeatedly to build and reshape healthcare services platforms.

WCAS first partnered with the Ortenzios in the mid-1990s to form Select Medical. In 2005, WCAS led a take-private buyout of the company, which later returned to the public markets via an IPO in 2009.  Now, more than fifteen years later, the same group is once again taking Select private.

This repetition signals long-term conviction paired with opportunistic capital deployment from investors and executives who have historically proven adept at unlocking equity value through operational performance, strategic repositioning and thoughtful capital structuring.

Why the Deal Is Strategically Interesting

Select Medical operates as a diversified post-acute platform spanning several distinct care settings:

• Long-Term Acute Care Hospitals (LTACH)
  • 104 critical illness recovery hospitals across 28 states
  • ~51% of revenue and ~42% of adjusted EBITDA
• Outpatient Physical Therapy
  • The largest outpatient rehabilitation platform with 1,900+ clinics across 39 states
  • ~27% of revenue and ~19% of adjusted EBITDA
• Inpatient Rehabilitation Hospitals (IRF)
  • 38 rehabilitation hospitals across 15 states
  • ~22% of revenue and ~38% of adjusted EBITDA

Select Medical also historically owned Concentra, the largest provider of occupational health services in the U.S., which was spun out into a separate public company in November 2024.

Despite its scale, Select Medical currently trades at sub 9x EBITDA, a meaningful discount to scaled rehabilitation platforms.  Large national physical therapy operators backed by private equity frequently transact in the mid-teens EBITDA multiples in the private markets.

That valuation gap is not random.  Select Medical’s LTACH segment has long acted as a valuation overhang due to its distinct reimbursement model, regulatory complexity, and capital intensity relative to rehabilitation services, among other reasons.

The LTACH Question

Interestingly, Select Medical’s LTACH division generates more revenue (albeit less EBITDA) than Concentra, which currently trades at 12x to 13x EBITDA in the public markets.

This raises an obvious strategic question:  Why not just spin out the LTACH division like Concentra?

One plausible answer is that the newly announced take-private transaction provides the structural flexibility and patient capital required to pursue precisely that type of restructuring.  Private ownership often enables strategic separations that would be difficult to execute under the scrutiny of public markets.

The Value Creation Thesis

If Select Medical were ultimately to separate its LTACH division from its rehabilitation businesses – which together represented ~60% of adjusted EBITDA in 2025 – several important dynamics would emerge.

• The rehabilitation platform could be valued against pure-play outpatient and inpatient rehabilitation comparables.
• Capital allocation could be focused entirely on growing the rehabilitation service lines, which benefit from strong demographic and demand tailwinds.
• Investors would no longer need to underwrite two fundamentally different reimbursement and regulatory profiles inside a single multiple.

In today’s market, scaled national physical therapy platforms – particularly those, like Select Medical, with strong payer contracting, market leadership, geographic density, accretive hospital partnerships, and robust support infrastructure – command materially higher valuation multiples than diversified post-acute operators.  The multiple arbitrage from unlocking the LTACH division could be considerable.

Why This Matters for Physical Therapy M&A

Having advised on more than two dozen outpatient physical therapy transactions, our firm, Livingstone, has seen firsthand how scale, focus, and infrastructure drive valuation in this sector.  Public markets often penalize complexity. Private markets tend to reward focus, growth visibility, and consolidation opportunities. If Select ultimately emerges as a more concentrated rehabilitation platform, it could trade much closer to its highest-multiple comparables. Private ownership would also give management the flexibility to pursue that strategy without the pressures of quarterly earnings cycles. Such a shift could further accelerate consolidation across outpatient physical therapy, particularly for scaled, well-capitalized regional operators.

Introduction to Livingstone and its Physical Therapy Experience

Livingstone is global mid-market M&A and debt advisory firm with 140 professionals across offices in the U.S., Europe, and Asia. The firm completes 70 transactions annually across five core sectors: Business Services, Consumer, Healthcare, Industrial, and Media & Technology

Since late 2021, Livingstone has advised on the sale of eight physical therapy platforms with a combined value approaching $1 billion. In the last two years alone, the firm completed four sell-side transactions: Spine & Sport, Metro Physical & Aquatic Therapy (to U.S. Physical Therapy), Fitness Quest Physical Therapy (to Confluent Health), and Access Physical Therapy & Wellness (to Confluent). Prior transaction experience involves industry leaders such as Agility Health, Alliance Physical Therapy Partners, ATI Physical Therapy, Foothills Therapy Partners, MOTION PT Group, PT Solutions, Renewal Rehab, and Therapy Partner Solutions.