The global rehabilitation market includes a wide array of services such as physical therapy, occupational therapy, speech therapy, addiction, and neurological rehabilitation. These services are majorly provided through dedicated rehabilitation centers, at home, or through telecommunication. The market was valued at USD 254.82 billion in 2023 and is projected to grow at a CAGR of around 5%- 6% from 2024 to 2030.

The market has recently attracted a lot of attention from investors, industry experts, and other stakeholders given the strong fundamentals and underlying growth drivers.

1. Aging Global Population

By 2030, 1.4 billion people will be aged 60 or above, increasing demand for rehabilitation services, particularly for age-related conditionsIn the U.S. alone, over 795,000 strokes occur annually, with approximately 60% of survivors requiring long-term rehabilitation.

2. Rising Chronic Diseases

Chronic diseases, including cardiovascular diseases, diabetes, and musculoskeletal disorders, now account for over 70% of global deaths annually.Rehabilitation for diabetes-related complications and cardiovascular conditions has seen a surge, with the global cardiac rehabilitation market itself projected to grow at 7.4% CAGR, reaching $4.4 billion by 2028.

3. Need for Neurological Rehabilitation

Neurological disorders such as Parkinson’s and Alzheimer’s are rising globally. In 2020, over 50 million people worldwide were living with dementia, a number expected to triple by 2050.

4. Increased focus on Mental Health

Rising awareness of mental health has led to an increased number of centers for psychological and addiction rehabilitation services.

Understanding the Operations & Numbers

Across all sub-sectors of rehabilitation and geriatric care services, there are some common themes such as :

Recurring Revenue Stream — Usually the patient is retained for a very long period of time by the service providers ensuring a steady revenue and a defined growth rate from existing patients.Labour Intensive —Amongst all the sub-sectors of healthcare delivery, rehabilitation centers are the most labor-intensive as the nursing staff and experts are required for the complete duration. Usually the cost accounts for 50% to as high as 66% of the revenue.Lease/Rent Costs — The lease rental costs are entirely dependent on the business models, while some of the companies only rent the spaces, some follow a hybrid model of owning a few centers and renting the rest.

Summary models of some of the market leaders in geriatric and rehab space

Depending on the type of services and ownership model of centers, the P&L and EBITDA margins differ

Summar P&L margins

Overview of the Global Investment Landscape:

Snapshot of public market tradeable for some of the global companies –

Depending on the business fundamentals and sub sector, the multiples vary. Companies like Ensign and Acadia command a higher multiple since they have diversified portfolio and presence in niche sectors which eliminate the cyclicicty with better operational efficiency and margin profiles

Private Market Round-Up:

In the past 5 years the industry has witnessed total fundraises worth 2Bn+, with 53 funding rounds and $28Mn being the median round size. The industry also witnessed a total of 15 M&As in the same period with $558Mn being the median acquisition value.

Fundraises in last 5 years2021 was the first year that saw big number of fundraises , strongly followed up in the next years

Some of the notable investors include the likes of Techstars, 406 Ventures, General Catalyst, and Google Ventures. Key fundraising rounds in the past year include the following —

Cortica raised $80Mn from Morgan Health, Nexus NeuroTech Ventures, and Autism Impact Fund to enhance its integrated autism care model and technology stack, aiming to expand value-based care contracts and reduce costs.Eleanor Health secured $50M in Series C funding from General Catalyst, Town Hall Ventures to scale its value-based substance use disorder treatment.InStride Health raised $90M from General Catalyst, Valtruis, and others to expand its hybrid pediatric mental health care model.

To summarize, on the back of proven business fundamentals, strong headwinds indicating a good growth rate, and with room for innovation, the rehabilitation market remains attractive for the investors across globe.

Where does the Indian market stand against the global market?

The Indian rehab market is valued at approximately $5 billion in 2023 and is expected to grow at a CAGR of over 9% through 2030 (IBEF). India accounts for a relatively smaller pie in the global market but promises more growth. India’s rehab care market remains largely unorganized and fragmented which is a reflection of the overall healthcare services market. The market is largely dominated by standalone facilities, non-specialized operators, or informal caregivers. The lack of integration and standardization has affected the overall quality and scalability of such services.

The developed markets such as North America and Europe have a much more well-structured network of inpatient and outpatient rehabilitation centers which are supported by government programs. The developed markets have also seen the emergence of more private players and investments in the space. The US alone has 15,000+ centers, in comparison to just 500–700 centers in India.

*Countires included are the once for which data is available

Indian Investment Landscape

In the past 5 years, a total of $50 Mn worth of fundraises have happened, with 16 funding rounds and $0.7 Mn being the median round size reflecting that the Indian market is still at a very nascent stage in comparison to the global market.

Last 3 years have witnessed a significant rise in terms of number and size of fundraises

Some of the notable investors include the likes of Lightrock India, Stakeboat Capital, and 3one4 Capital. Key fundraising rounds in the past year include the following

Primus Health raised $20 million in seed funding from General Catalyst, Gruhas, and Zerodha co-founder Nikhil Kamath. The funds will fuel expansion to 3,500 senior living homes across six cities, addressing India’s rapidly growing senior care marketSukino Healthcare secured $6 million from Stakeboat Capital: Sukino specializes in post-hospitalization and palliative care. The investment aimed to scale its transitional and long-term care centers across India.Mental health platform Sukoon raised $15 million from Lightrock India to expand its footprint in mental health rehabilitation. Sukoon operates specialized inpatient and outpatient mental health services with a focus on holistic treatment.

Way forward for the Indian Market

The Indian market in the past few years has seen a substantial movement with the emergence of private players and investments. Many players have realized that strong growth drivers present a good opportunity to enter and expand. A few expected trends that the market with witness include –

1. Infrastructure Development: Increasing rehabilitation bed capacity, particularly in rural and semi-urban areas.

2. Increased Investments — As the capacity expands and a greater number of players emerges, more private investment will follow and the trend of increase in investments will continue.

4. Investment from Large Chains: While any large chain’s investments or announcements are still nascent compared to global standards, players like apollo, fortis, and Max will continue to expand the ancillary offerings such as physiotherapy and wellness.

LoEstro Advisors is an investment banking firm specializing in sell-side fundraising and M&A advisory, along with a strong consulting arm. Recognized as the #1 financial advisor in education in India, we are the advisor of choice to India’s blue-chip education businesses.

Over the last four years, we have grown to be one of India’s largest (in terms of M&A transactions) homegrown boutique investment banks, with $1.2bn+ worth of combined deals closed across education, healthcare, consumer, and technology sectors.