WHAT IS YOUR DRUG REHAB FIRM WORTH?The Addiction-Rep team has extensive experience in the various disciplines necessary to underwrite your business.
*(there are many instances that do not involve a sale of the firm).
The Addiction-Rep team can provide valuations for all of the situations listed above. Part of our report will be a benchmark report comparing revenue, expenses, and profit of your firm with similar firms.
Addiction-Rep has a policy that your first call for input and guidance on valuation, merger & acquisition activities is free, with no commitment required from your firm and is completely confidential.
The behavioral health M&A market in 2026 has stabilized after the 2021 to 2022 multiple compression. Treatment centers selling today see different multiples by facility type, payer mix, and geography. The numbers below reflect 2026 deal activity for addiction treatment and behavioral health acquisitions.
Headline 2026 market stats:
For a deeper view of how multiples vary by state, see our Industry Benchmarks: Average Rehab Valuation Multiples by State reference.
| Facility Type | Add-On Multiple | Platform Multiple | Notes |
|---|---|---|---|
| Medical Detox | 4x to 6x | 7x to 10x | Higher staffing intensity, real estate exposure |
| Residential Treatment | 4x to 7x | 8x to 11x | Most common deal type. Diversified payer mix critical |
| Partial Hospitalization (PHP) | 5x to 7x | 8x to 11x | Often bundled with residential or IOP |
| Intensive Outpatient (IOP) | 5x to 8x | 9x to 12x | Lower real estate footprint, higher operating leverage |
| Standard Outpatient | 4x to 8x | 10x to 14x | Highest platform multiples in behavioral health |
| Autism / ABA Services | 6x to 10x | 12x to 15x | Premium subsegment driven by reimbursement stability |
| Sober Living | 2x to 4x | 4x to 6x | Lower clinical intensity, real estate dependent |
| Payer Mix Profile | EBITDA Multiple Range | Driver |
|---|---|---|
| 70 percent or more commercial in-network | 6x to 11x | Predictable cash, lower denial rates, defensible underwriting |
| 50 to 70 percent commercial in-network, 20 to 40 percent OON | 5x to 9x | Mid-range. OON revenue discounted by buyers due to reimbursement risk |
| 50 percent or more out-of-network | 3x to 6x | Sustained OON dependency caps the multiple |
| Medicaid-heavy (50 percent or more) | 4x to 7x | Stable revenue but lower margin. Multiple varies by state Medicaid rates |
| Cash-pay or self-pay heavy | 2x to 5x | Buyers heavily discount cash-pay census without payer diversification |
For context on how out-of-network reimbursement affects valuation, see our Out-of-Network Billing Strategy Timeline.
| State | Typical Multiple | Market Activity | Why It Trades This Way |
|---|---|---|---|
| Florida | 4x to 6x | Very high | Mature market, dense supply, oversaturation in South Florida caps the upside |
| Texas | 3x to 5x | High and growing | Expanding Medicaid managed care, business-friendly licensing |
| California | 4x to 6x | High | Strong commercial reimbursement, complex licensure (DHCS) |
| Arizona | 4x to 7x | Moderate | Growing market, AHCCCS expansion, lower facility cost basis |
| New Jersey | 5x to 7x | Moderate | Strong commercial payers, tight licensure (DOH) limits supply |
| Tennessee | 4x to 6x | Moderate | Growing market, CARF and Joint Commission accreditation common |
| Massachusetts | 5x to 7x | Moderate | Strong commercial reimbursement, BSAS licensure |
For active listings in these markets, see our Rehabs for Sale page.
A defensible drug rehab valuation uses three valuation approaches in parallel, then weights them based on the facility’s profile. No single method captures fair market value on its own. A residential facility with high commercial reimbursement weights toward the income approach. A multi-site platform with active acquisition interest weights toward the market-based approach. A facility with growing census and a clear three-year forecast weights toward discounted future earnings.
The three approaches:
A NACVA-certified valuation report from Addiction-Rep’s partner Fred Schmidt produces all three, weights them by facility profile, and delivers a narrative report that holds up in M&A negotiation, partnership buyout, divorce litigation, and lender underwriting. The narrative matters as much as the number. Buyers and lenders discount valuations that arrive without supporting documentation.
The Income Approach values a treatment center based on its historical earning power. The standard methodology is a three-year EBITDA lookback, weighted toward the most recent year, then capitalized at a rate that reflects the facility’s risk profile. In addition, we can provide an opinion of value on your real estate.
How it works:
The Income Approach is the most reliable method for facilities with three or more years of stable operating history, consistent payer mix, and clean financial records. It is less reliable for facilities in their first two years of operation, facilities going through major payer transitions, or facilities with significant one-time items that distort historical EBITDA.
Common adjustments that surface in income approach normalization:
The Discounted Future Earnings Approach (also called Discounted Cash Flow, or DCF) values a treatment center based on projected earnings over a forward forecast period, typically five years, then a terminal value capturing the period beyond.
How it works:
This approach is most useful when:
The DCF approach is sensitive to assumptions. Optimistic projections inflate value but get discounted by sophisticated buyers. The defensibility of the DCF rests on the credibility of the forecast and the documentation behind each assumption.
The Market-Based Approach values a treatment center based on what comparable facilities have sold for. The methodology relies on a database of recent transactions filtered for similar facility size, level of care, geography, and payer mix.
How it works:
The Market-Based Approach is the strongest method when there is a deep transaction database (residential treatment, IOP, mental health outpatient). It is weaker for niche subsegments with thin transaction history (sober living, specialized adolescent, faith-based facilities).
A defensible market-based analysis at Addiction-Rep draws on:
The output is a multiple range, not a single number. The narrative explains why the subject facility falls at the high end, low end, or middle of the comparable range.
Typical multiples used:
The most common method is Price divided by the Historical Average Adjusted EBITDA.
The final enterprise value blends all three approaches, weighted by facility profile. The weighted enterprise value is the headline number. The narrative report explains how each approach was applied, what adjustments were made, and why the weighting reflects the facility’s specific profile. A defensible valuation always shows its work.
Typical weighting by profile:
| Facility Profile | Income Approach Weight | DCF Weight | Market-Based Weight |
|---|---|---|---|
| Mature, stable EBITDA, no growth narrative | 50 percent | 10 percent | 40 percent |
| Mature, growing census or expansion plan | 30 percent | 30 percent | 40 percent |
| Early-stage (under 3 years operating) | 10 percent | 50 percent | 40 percent |
| Distressed or turnaround | 20 percent | 40 percent | 40 percent |
| High M&A activity in subsegment | 30 percent | 20 percent | 50 percent |
We rely on multiple methods and apply a weighted average to provide an estimate of the subject’s business value. This blended value is called the “Enterprise Value.”
The formula is straight forward:
Business Valuation Method / Value Multiplied by Weight Percent = Weighted Values.
Weighted Values added together = Enterprise Value.
The Addiction-Rep team has extensive experience in the various disciplines necessary to underwrite your business.
What does an Addiction-Rep valuation provide to you?
For more information, please call or email
Fred Schmidt-Managing Director
(908) 377-1616
[email protected]
Jim Peake-Managing Director
(781) 222-0000
[email protected]
A full NACVA-certified valuation from Addiction-Rep ranges from $7,500 to $25,000 depending on facility size, complexity, and intended use (sale preparation, partnership buyout, litigation support, lender underwriting). The cost is dwarfed by the impact on a sale price. A poorly valued facility leaves $250,000 to $2 million on the table at sale. The valuation is the cheapest insurance in the M&A process.
Standard turnaround is 4 to 8 weeks from data room receipt to delivery of the final narrative report. Faster turnaround is possible (2 to 4 weeks) for emergency cases like litigation or distressed sales, with a rush fee. The bottleneck is rarely the analysis. It is the facility’s data assembly, particularly clean financials, payer mix breakdowns, and census trend documentation.
Three years of financial statements (P&L, balance sheet, cash flow), three years of tax returns, payer mix reports by year, census reports by level of care, average length of stay by payer, accounts receivable aging, fixed asset schedule, real estate ownership and lease documentation, organizational chart with key clinician roster, current credentialing status with each major payer, and any active or pending litigation. For a fuller pre-sale checklist, see our How to Sell Your Rehab Center guide.
Buyers underwrite the durability of the revenue, not just the size. A facility with current Aetna, Cigna, BCBS, and Optum in-network contracts trades at a higher multiple than the same facility with a heavy out-of-network or single-payer concentration. Lapsed credentialing, missed recredentialing windows, or upcoming payer terminations all show up as discounts in the buyer’s offer. For more on credentialing’s revenue impact, see our Behavioral Health Credentialing Services overview.
Five recurring mistakes that lower a facility’s sale price:
You can run an internal estimate using EBITDA and a market multiple. That gets you a directional number for early planning. You cannot use an internal estimate for a partnership buyout, divorce litigation, lender underwriting, IRS purposes, or buyer-side negotiation. Those situations require a credentialed appraiser whose methodology stands up to challenge. NACVA certification is the industry standard.
State licensing complexity, market saturation, payer contracting environment, and labor cost all flow through the multiple. Florida’s mature market caps multiples at the lower end of the residential range. Arizona and Tennessee carry slight premiums for cleaner licensure environments. New Jersey and Massachusetts get a bump for strong commercial reimbursement. See our Industry Benchmarks: Average Rehab Valuation Multiples by State for the full state-by-state breakdown.
Fred Schmidt is Managing Director of Addiction-rep, he has 44 years of commercial real estate services experience, and has led commercial real estate services operations on a local, regional and global basis. He drives the firm’s business engagement strategy for Addiction-rep. The Addiction-rep team provides Strategic Planning, Marketing Services, Merger & Acquisition and Valuations for behavioral services firms. He has been involved with over 80+ Merger and Acquisition transactions throughout his career.
Prior to Addiction-rep he served as President and COO of Coldwell Banker Commercial and Commercial Leader for the Realogy family of companies. In that role he oversaw the operations of over 270 locations in 44 countries, consisting of 3,000 professionals. He supervised the delivery of all services to clients including the Global Client Solutions team, they included advisory and transaction services, project management, facilities management, financial solutions and site selection services.
Prior to his role at CBC/Realogy he was the Managing Director for the Northeast Corridor at United Systems Integrators a Corporate Services Firm that is now part of Johnson Controls. He spent 20 years at CBRE in the New York region and was one of the founding members of the CBRE Corporate Services team, he assumed the challenge of building the corporate services outsourcing with corporate clients.
Resides in Summit, NJ
In 1982 Jim started in direct mail in catalogs etc. By 1994 he started a digital imaging company called the Digital Mint. He later joined K2 Design who, during the silicon alley dot com boom, went public on the NASDAQ. One of his notable projects with K2 was Kasparov vs. IBM’s Deep Blue supercomputer in 1996. He built/sold several websites for AOL, Prudential Securities, Oppenheimer Funds amongst others.
In 1996 Jim moved to Boston and joined an MIT startup, building and selling database driven websites. After the dot com bust, he entered the Speech Recognition business with Audiopoint and Voice Access Technologies. Following the Speech Recognition opportunity, Jim became an independent consultant and picked up a gig with a medical magazine publisher. He was tasked with building an ad network and signing big pharma companies. After the ad network consulting project Jim became a consultant for a drug rehab treatment directory taking them from $300K in annual top line revenue to $300K in profit per month in less than 24 months.
In 2008 Jim formed Addiction-Rep providing website design and development, SEO, PPC and social media services to the drug rehab industry.
Jim has been facilitating the buying, selling and funding of drug rehabs since 2018. He also spearheaded a funding, sales and marketing effort with an Indiana start up that created a breakthrough medical device for addicts (the Bridge Device).
With over 40 years in business and many connections Jim has assembled an all-star team of industry veterans in very specific skill sets to serve our clients. Our industry focus is Behavioral Healthcare, Senior Living and Drug Testing Labs serving them with Advisory, M&A, Management Consulting and Digital Marketing services.
